Crime and Inflation in Cross-National Perspective

Abstract

Inflation belongs in the repertoire of economic indicators used in research on crime patterns. A resurgence of research on the relationship between economic conditions and crime has occurred in recent years, most of it showing crime increases during economic downturns and declines during recoveries. The so-called Great Recession of 2008–9 broke this pattern; crime rates fell or were flat. Historical scholarship on long-term crime increases during “price revolutions” and scattered empirical research on the relationship between short-run changes in crime and inflation suggest that low inflation rates help explain the absence of crime increases during the recent recession. Inflation, net of other economic conditions, had significant effects on homicide, robbery, and burglary rates in several European nations and the United States from the early 1980s to 2010. Inflation may be connected to crime through the dynamics of markets for stolen goods. As prices rise, the demand for cheap stolen goods grows, which strengthens incentives to increase the supply of stolen merchandises. Property crime rates increase. Violent crimes also increase as transactions multiply in “stateless” locations beyond the purview of formal authorities. The process operates in reverse as price increases diminish.