The cost of controlling crime: A study in economies of city life

Abstract

Sizeable economies and diseconomies of size exist with regard to a given quality of police protection. Our results show that the per capita social cost of crime declines slowly with larger cities until a low point is reached in cities with a population ranging from 250, 000 to 500, 000. Social costs rise sharply for cities of over 1 million inhabitants. By and large, the smaller cities are able to reduce their crime rates with an increase in police numbers while the larger cities fail to do so based on evidence from time series analysis. Thus our results underestimate the social cost of crime in large cities even though they show the cost to be lower in small cities than in large cities. The results suggest that policies of decentralization rather than increasing police rates may be the most cost-effective long-run solution to high crime rates in large cities. Recommendation of a policy, however, awaits a more definitive analysis of costs of other services by city size.