Poverty, Business Cycle Conditions, and Property Crime: 1959-1992
Allen, Ralph C., Stone, Jack H., Atlantic Economic Journal
Employing time-series data for the U.S. for 1959-92, the following issues in the professional crime literature are empirically analyzed. An increase in poverty is associated with diminished legal earnings of low-income individuals and diminished returns to property crime directed against these individuals. Therefore, is the net impact on property offenses of an increase in poverty positive or negative? Rising income inequality increases the self-defense responses of upper-income crime targets and increases the potential returns to crime directed against these targets. Therefore, is the net impact on property offenses of rising income inequality positive or negative? Unemployment reduces the returns to legal activity and increases poverty; however, by diminishing economic wealth and increasing guardianship, unemployment also lowers illegal returns. Therefore, is the net impact on property offenses of an increase in unemployment positive or negative? Do inflation and unemployment influence property crime only through their impact on poverty, or can they operate directly through their effects on relative returns to illegal activity?
The following are the statistical results (t-values in parentheses) obtained from a log-log ARIMA(2,1,0) model on the rate of burglary offenses (CRIME) per 100,000 population:
[Mathematical Expression Omitted],
where: POV is the percentage of individuals with money income below the official poverty line; INEQ is the pretax or transfer GINI; UNEMP is the current unemployment rate; and INF is the annual percentage change in the Consumer Price Index (data are in log form, and the results for the constant, autoregressive, demographic, criminal justice system, and lagged variables are omitted). …