The Impact of Economic Conditions on Robbery and Property Crime: The Role of Consumer Sentiment*

Abstract

Despite its long history in criminology, research on the relationship between macroeconomic conditions and rates of common crime remains limited. That is in part because many analysts doubt that any systematic relationship exists and in part because of disagreement with regard to the validity of the indicators typically used to measure economic conditions. We argue in this article that good theoretical reasons exist to expect macroeconomic effects on crime rates, but many theories imply that collective perceptions of economic hardship should have effects on crime that are independent of those of more "objective" economic indicators. To evaluate this argument, we examine the relationships between the Index of Consumer Sentiment and regional robbery, burglary, larceny, and motor vehicle theft rates in the United States between 1970 and 2003, which was a period of large swings in both consumer sentiment and instrumental crime. Controlling for several factors thought to influence temporal variation in crime rates, we find that consumer sentiment had significant effects on robbery and property crime rates over the period that were largely independent of the * A previous version of the paper was presented at the 2006 meeting of the American Sociological Association. We thank the anonymous reviewers, the editor, and Eric Baumer for helpful comments on a previous draft.

Bringing Crime Trends Back into Criminology: A Critical Assessment of the Literature and a Blueprint for Future Inquiry

“…Changes in economic conditions have been linked to involvement in criminal behavior through each of the three general causal mechanisms highlighted in Table 1, in some cases in contrasting directions (Cantor & Land 1985). Prominent pathways for enhanced motivation for crime arise from frustrations about limited economic opportunities, bleak future prospects, or perceptions that pursing economic rewards through illicit means is justified (e.g., Rosenfeld & Fornango 2007, Rosenfeld et al 2013.…”

Addressing Unobserved Heterogeneity in the Relationship Between Crime and Consumer Confidence

“…Rosenfeld and Fornango (2007) are the first to claim that a subjective measure, the collective perception of economic prosperity or hardship, might better reflect the factors that influence the decision making of economic agents (including potential criminals). To evaluate this argument, they examine the relationship between the Index of Consumer Sentiment and regional property crime and robbery for four census regions in the United States over a period of 31 years.…”

“…However, these standard techniques are better suited to micro (short) panels with large N (number of units) and small T (number of years) that emphasize unit-specific heterogeneity and assume cross-sectional independence, whereas data used in crime-related fields are normally macro (long) panels with the unit dimension similar in size to the time dimension. Empirical studies in this area that use macro panels include Raphael and Winter-Ebmer (2001), Papps and Winkelmann (2000), Edmark (2005), Mehlum et al (2006), Mauser and Maki (2003), Rosenfeld and Fornango (2007), and Blais et al (2011) to mention a few, for which the average N is 16 and the average T is 23. When T is large, unobserved time-varying heterogeneity induced by common shocks will introduce cross-sectional dependence and can render the conventional pooled estimators inconsistent.…”

Economic fluctuations and crime: temporary and persistent effects

“…Thus, Sampson and Laub (1993), Lemert (1967) and Farrington (1977) suggest that the strength of social bonds can explain participation in criminal activities and that people may become locked into a cycle of offending since if they are caught and punished are deliberately stigmatized by the criminal justice system. Bourguignon (1998) shows that crime rates are positively correlated with income inequality and relative poverty.2 F 3 Furthermore, Rosenfeld and Fornango (2007) propose that consumer sentiment has significant effects on robbery and property crime rates and they find that it significantly affects the crime decline during the 1990s.…”