Abstract
This paper investigates the effect of economic conditions (carrots) and sanctions (sticks) on murder, assault, robbery, burglary, motor vehicle theft, grand larceny, and rape in New York City, using monthly time‐series data spanning 1974–99. Carrots are measured by the unemployment rate and the real minimum wage; sticks are measured by the number of felony arrests, size of the police force, and number of New York City residents in prison. In addition, the paper tests the validity of the “broken windows” hypothesis. Consistent with its implementation by the New York Police Department, we use misdemeanor arrests as a measure of broken‐windows policing. The broken‐windows hypothesis has validity in the case of robbery, motor vehicle theft, and grand larceny. While both economic and deterrence variables are important in explaining the decline in crime, the contribution of deterrence measures is larger than those of economic variables.
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