Prices, Policing and Policy: The Dynamics of Crime Booms and Busts

51 Pages Posted: 2 May 2018

See all articles by Tom Kirchmaier

Tom Kirchmaier

London School of Economics - Centre for Economic Performance; Copenhagen Business School

Stephen J. Machin

London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP); London School of Economics & Political Science (LSE) - Department of Economics

Matteo Sandi

London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP)

Robert Witt

University of Surrey

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Abstract

In many historical episodes, the extent of criminal activity has displayed booms and busts. One very clear example is the case of metal crime, where in the face of big increases in value driven by world commodity prices, the incidence of metal thefts in the UK (and elsewhere) rose very sharply in the 2000s. Early in the current decade, they fell sharply again. This paper studies the roles of prices, policing and policy in explaining these crime dynamics. The empirical analysis shows sizeable and significant metal crime-price elasticities, in line with the idea that changing economic returns do shape crime. However, the rapid upward and downward trends are not only due to price changes.Their temporal evolution is also explained by changes in policing and policy. On the former, a difference-in-differences approach is used to document an important role of policing as a consequence of an anti-metal crime operation introduced in 2012. On the latter, the introduction of the Scrap Metal Dealers Act 2013 is exploited to study the impact of policy on the economic activity of scrap metal dealers in England and Wales. Results from our difference-in-differences specification suggest that the tougher regulatory system introduced by the policy hindered the economic activity of pre-existing dealers, reflecting the reduced market size for potential metal criminals to sell what they have stolen.

Keywords: metal crime, metal prices, commodity prices

JEL Classification: K42

Suggested Citation

Kirchmaier, Tom and Machin, Stephen J. and Sandi, Matteo and Witt, Robert, Prices, Policing and Policy: The Dynamics of Crime Booms and Busts. IZA Discussion Paper No. 11490. Available at SSRN: https://ssrn.com/abstract=3170279

Tom Kirchmaier (Contact Author)

London School of Economics - Centre for Economic Performance ( email )

Houghton Street
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HOME PAGE: http://https://sites.google.com/site/tomkirchmaier/home

Copenhagen Business School ( email )

Porcelænshaven 24A, 3rd floor
Copenhagen
Denmark

Stephen J. Machin

London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP) ( email )

Houghton Street
London WC2A 2AE
United Kingdom

London School of Economics & Political Science (LSE) - Department of Economics ( email )

Houghton Street
London WC2A 2AE
United Kingdom

Matteo Sandi

London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP) ( email )

Houghton Street
London WC2A 2AE
United Kingdom

Robert Witt

University of Surrey ( email )

Guildford
Guildford, Surrey GU2 5XH
United Kingdom

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