A Unified Approach to Measuring the Costs of Violent Crime Risk

Overall crime rates in the UK have been steadily declining since the mid 1990s. In the past few years, however, the incidence of violent crime, and in particular murder, began to rise. Between July 2017 and June 2018 the number of homicides went from 630 to 719, a 14% increase - and a fourth year of consecutive rise - in the number of homicides. Against the backdrop of rising homicide counts, since 2010, police officer strength has declined by over 20,000 (full-time equivalent) officers - a drop of around 15%. Such a decline in police resources effectively underscores the importance of understanding the social costs of violent crime, in that such an understanding will better aid the allocation of these increasingly scarce resources.

The primary aim of the project is to use a previously unexploited combination of existing crime data and survey/administrative data, supplemented with newly available house price data from Zoopla, to answer the following questions:

1.) How much does a recent murder affect house prices in the neighbourhood? Using well-established economic models, we will estimate households' willingness to pay to avoid violent crime risk. This is our key approach to measuring the financial cost of a recent, local murder.

2.) Are individuals' life satisfaction and perceptions of crime risk adversely affected by an unexpected violent crime event in the local area? Widening the scope of our research to incorporate these subjective measures enables us to provide a more comprehensive assessment of the societal costs of violent crime incidence.

3.) To what extent are subjective outcomes the mechanism at play behind house price changes? This final question is one of the key innovations of our unified approach, and is also the area where we effectively leverage the richness of the data that we combine. With the spatio-temporal detail of our data, we are able to discern the causal pathways of the key variables at play, and to understand to what extent changes in subjective well-being outcomes map into changes in house prices, and thus willingness to pay to avoid violent crime risk. This is crucial to both shed light on the complexities of the behavioural response of individuals to criminal events and to improve the design of policies that cope with the effects of crime.

Our methodological approach is innovative in several dimensions. First, we merge existing data sources in an original way to create datasets with a unique combination of spatial and temporal detail. In particular, we merge murder statistics with two sources house price data and three different sources of survey data by contemporaneously exploiting the place (postcode) and time (day) of the crime event. This distinctive data combination enables us to use advanced econometric techniques, and a novel set of empirical strategies, to identify the causal impact of crime on a series of policy relevant outcomes. Second, focusing on murders - aside from being novel and timely - allows us to consider a type of crime that is unpredictable (within a locality) but at the same time perceptible. These characteristics help to circumvent fundamental methodological problems related to both the measurement of crime and the role of unobservable confounding factors, ultimately allowing us to produce compelling, credible estimates of the causal impact of crime. These estimates will be of interest to both academics and to policy makers.

Obtaining a clean, causal estimate of the societal costs violent crime risk will be of use to the Ministry of Justice (MoJ) in their role of assessing the costs of crime. Our work will also be of interest to health economists at the Department of Health and Social Care (DHSC) and researchers at the Ministry of Housing, Communities & Local Government (MHCLG) in that we consider both a broad set of psychological costs of a recent violent crime, and how such costs are experienced by those within the local community.

Who will benefit from this research and how?
1. Who: Academic social scientists with interests in crime. These include economists, sociologists, psychologists, demographers, geographers and social policy analysts.
How: By simultaneously analysing objective and subjective effects of crime, we expect that our unified approach will be beneficial to bring researchers from these disciplines into closer contact and to encourage inter-disciplinary research. Our research will push theoretical foundations and empirical methodologies for measuring the cost of crime. In doing so, we endeavour to shed light on key questions that are relevant to all academic disciplines with an interest in crime. For example, we will be able to assess how the impact of crime on mental health diffuses in the local area, shedding light on the spatial nature of well-being, something of immediate interest to psychologists and geographers. By studying the causal effect of murders on the housing market, we will be able to provide estimates of the impact of crime on residential displacement, which would benefit research by demographers and sociologists.

2. Who: Policy analysts in government, including health economists at the Department of Health and Social Care (DHSC) and researchers at the Ministry of Justice (MoJ) and at the Ministry of Housing, Communities & Local Government (MHCLG).
How: By studying the impact of crime on dimensions such as housing and mental well-being, our research will produce empirical evidence on key areas of policy making. In particular, our project will be beneficial to the DHSC, as it will provide both a method to measure the impact of crime that is complementary to their current approach and additional empirical evidence to support the development of health policies. We have involved DHSC from the early stage of this proposal and they have been instrumental in recommending specific well-being outcomes to focus on (ranging from mental stress to workplace absenteeism) and that are relevant for their policy agenda. DHSC has informally agreed to participate in the policy impact workshop - the key dissemination event for the project. We foresee also the participation from additional government departments (including MoJ and MHCLG) as well as researchers and practitioners from local governments. The policy event will also be a platform to establish new connections with policy makers and practitioners, therefore ensuring that the impact of our research will extend beyond the project lifetime.

3. Who: Third sector organisations with an interest in helping people affected by crime, such as Victim Support and Crime Concern.
How: Our research will provide a broader perspective about the cost of crime, encompassing both material and immaterial dimensions and recognising that the traumatic consequences of violent crime could involve many individuals in the affected neighbourhood. Our empirical findings could be used by these organisations to better target individuals affected by crime and to improve the design and provision of services, ranging from more generic emotional support to specific programmes such as the National Homicide Service (a service delivered by Victim Support and funded by MoJ).

4. Who: Academics who would like to use the datasets to replicate or extend analyses about the cost of crime.
How: Our research will produce scientific use files and technical material that will be stored at the UK Data Service for the benefit of the research community. We will provide detailed instructions and computer codes on how to obtain the datasets derived from the project and link them to reproduce the datasets we use in our analyses. Our unique blend of data will allow to study the effect of crime on a wide range of outcomes, beyond those considered in this research.