Seemingly Inextricable Dynamic Differences: The Case of Concealed Gun Permit, Violent Crime and State Panel Data
48 Pages Posted: 26 Jun 2017
Date Written: June 24, 2017
Setting off an ongoing controversy, Lott and Mustard (1997) famously contended that so-called shall-issue laws (SILs) deterred violent crime. In this controversy the weapon of choice has been the inherently static differences-in-differences (DiD) estimator applied to state and county panel data spanning various intervals of time. In contrast, by accounting for the behaviors of forward-looking potential and contemporaneous violent criminals, this paper uses a novel method, the seemingly inextricable dynamic differences (SIDiD) estimator. SIDiD nests DiD and yields unbiased and time-consistent estimates of three distinct contemporaneous effects of SILs: the entry effect on those eligible to enter, the surprise effect on violent criminals who entered prior to the adoption of SILs, and the selection effect on violent criminals who entered afterwards.
Applying our new method to the standard state panel data and controls in the literature, we:
(i) estimate that all three effects to be robustly positive and significant with the dominance of increased entry resulting in a larger population of violent criminals, more churning of in and out of the violent crime population and an increase in violent crime rates,
(ii) find overwhelming evidence against the L&M's deterrence hypothesis,
(iii) reject decisively the restrictions that would reduce our dynamic specification to that of the static DiD,
(iv) show that the famously differing results between L&M and Ayers and Donohue (2003, 2009) stem from the relatively short post-treatment sample of L&M where the DiD estimate is a combination of mostly the entry and surprise effect whereas in the longer post-treatment samples of A&D the DiD estimate is a combination of all three effects. Finally,
(v) we estimate that in the counterfactual absence of SILs, the rate of violent crime would be reduced by one third.
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