Willingness-to-Pay for Crime Control Programs

Abstract

This paper reports on a new methodology to estimate the "cost of crime." We adapt the contingent valuation method used in the environmental economics literature to estimate the public's willingness-to-pay for reductions in crime. In a nationally representative sample of 1300 U.S. residents, we found that the typical household would be willing to pay between $100 and $150 per year for crime control programs that reduced specific crimes by 10% in their communities. In the aggregate, these amounts imply a marginal willingness-to-pay to reduce crime of about $31,000 per burglary, $75,000 per serious assault, $253,000 per armed robbery, $275,000 per rape and sexual assault, and $9.9 million per murder. Consistent with economic theory and rational behavior, willingness-to-pay generally increases with both income and the risk of victimization. The new estimates are between two and ten times higher than prior estimates of the cost of crime to victims and are thought to more fully represent the true cost of crime to society. By focusing exclusively on costs to victims of crime and the criminal justice system, previous studies have ignored many other social costs of crime.

Keywords: economics of crime, contingent-valuation, willingness-to-pay, cost of crime

JEL Classification: K14, K42, H43