The economic and social costs of crime

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Munich Personal RePEc Archive

The economic and social costs of crime

Brand, Sam and Price, Richard

Home Office, London

October 2000

Online at https://mpra.ub.uni-muenchen.de/74968/

MPRA Paper No. 74968, posted 31 Dec 2016 11:09 UTC

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Home Office Research Study 217

The economic and social costs of crime

Sam Brand and Richard Price

Eco no mics and Reso urce Analysis

Research, Develo pment and Statistics Directo rate Ho me O ffice

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The economic and social costs of crime

Home Office Research Studies

The Ho me O ffice Research Studies are repo rts o n research undertaken by o r o n behalf o f the Ho me O ffic e. They c o ver the ra ng e o f sub jec ts fo r whic h the Ho me Sec reta ry ha s respo nsibility. Titles in the series are listed at the back o f this repo rt (co pies are available fro m the a d d re ss o n the b a c k c o ve r). O the r p ub lic a tio ns p ro d uc e d b y the Re se a rc h, Develo pment and Statistics Directo rate include Research Finding s, the Research Bulletin, Statistical Bulletins and Statistical Papers.

The Research, Development and Statistics Directorate

RDS is part o f the Ho me O ffice. The Ho me O ffice’s purpo se is to build a safe, just and to lerant so ciety in which the rig hts and respo nsibilities o f individuals, families and co mmunities are pro perly balanced and the pro tectio n and security o f the public are maintained.

RDS is also a part o f the G o vernment Statistical Service (G SS). O ne o f the G SS aims is to info rm Parliament and the citizen abo ut the state o f the natio n and pro vide a windo w o n the wo rk a nd perfo rma nce o f g o vernment, a llo wing the impa ct o f g o vernment po licies a nd actio ns to be assessed.

Therefo re –

Research Develo pment and Statistics Directo rate exists to impro ve po licy making , decisio n taking and practice in suppo rt o f the Ho me O ffice purpo se and aims, to pro vide the public and Parliament with info rmatio n necessary fo r info rmed debate and to publish info rmatio n fo r future use.

“ The vie ws e xpre sse d in this re po rt are tho se o f the autho rs, no t ne ce ssarily tho se o f the Ho me O ffice (no r do the y re fle ct G o ve rnme nt po licy).”

First published 2 0 0 0

Applicatio n fo r repro ductio n sho uld be made to the Co mmunicatio ns and Develo pment Unit, Ro o m 2 0 1 , Ho me O ffice, 5 0 Q ueen Anne’s G ate, Lo ndo n SW 1 H 9 AT.

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i

Forew ord

The co sts o f crime have beco me an increasing ly impo rtant to o l fo r decisio n-makers co ncerned with crime and its impact o n so ciety. They help make explicit judg ements abo ut the relative merits o f alternative po licies and pro g rammes which are already implicit in decisio n-making abo ut ho w to allo cate reso urces to tackling crime – bo th o verall and between different types o f crime. Ho wever, the supply o f g o o d quality info rmatio n o n co sts has no t kept pace with the demand fo r it. This study takes the first steps to addressing this pro blem.

Crime reductio n and criminal po licy is making pro g ress but still a fair way behind so me areas o f g o vernment in using evidence o f effectiveness and co st effectiveness as the basis fo r setting prio rities and allo cating reso urces. Many o ther departments ro utinely carry o ut detailed co st-benefit appraisals and evaluatio ns o f new so cial po licies. The G o vernment’s Crime Reductio n Pro g ramme, and challeng ing new Public Service Ag reements fo r the Ho me O ffic e , C rimina l Justic e Syste m a nd o the r g o ve rnme nt b o d ie s, a re c o ntrib uting to a n increased awareness o f the ro le that co st o f crime estimates can play in co mparing the co sts o f initiatives with the likely benefits that they can achieve.

Altho ug h they break new g ro und in this co untry, the co st estimates in this study are far fro m perfect. Further wo rk is necessary, and will be carried o ut, to ensure that the estimates are ro bust, based o n the best available evidence and capable o f bring ing a real chang e to the way in which decisio n-makers at all levels view the pro blem o f crime and ho w to tackle it.

Paul W iles

Directo r o f Research, Develo pment and Statistics Ho me O ffice

If yo u wo uld like to co mment o n this paper please co ntact:

Philip W itcherley

Ho me O ffice Eco no mics and Reso urce Analysis Unit Ro o m 2 7 1

5 0 Q ueen Anne’s G ate, Lo ndo n SW 1 H 9 AT.

United King do m

Tel: +4 4 (0 )2 0 7 2 7 3 3 2 8 4 Fax: +4 4 (0 )2 0 7 2 7 3 4 0 1 3

E-mail: Philip.W itcherley@ Ho meO ffice.g si.g o v.uk

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Acknow ledgements

Many members o f the Research, Develo pment and Statistics Directo rate co mmented and assisted in the develo pment o f this study. W e wo uld particularly like to thank Caro le W illis and Sanjay Dhiri in ERA fo r their suppo rt and advice thro ug ho ut. Thanks also g o to Mark W einer and Phil W itcherley fo r taking o n the pro ject at an impo rtant stag e and steering it in the rig ht directio n.

W e w o uld like to tha nk the ma ny p e o p le insid e a nd o utsid e the Ho me O ffic e w ho co mmented o n vario us drafts o f the study. Particular thanks g o to Pat Mayhew fo r her incisive and co nstructive co mments and to Tracey Budd and Jo anna Mattinso n in the British Crime Survey team fo r their help and g uidance in extracting relevant info rmatio n fro m the survey.

The C JS pro je c t te a m a nd c o nsulta tive g ro up o n the de ve lo pme nt o f the c o st o f c rime perfo rmance measure fo r the CJS have bo th g enerated a lo t o f debate and co nstructive criticism, and have helped to ensure the real-wo rld relevance o f a po tentially arcane study.

Pa rtic ula r tha nks g o to Simo n Fish a nd G e o ff Le w is (HM Tre a sury), Ro b C ullig a n (Asso ciatio n o f Chief Po lice O fficers), Paul Rayner (Serio us Fraud O ffice) and Cecilia French (Ho me O ffic e ), w ho a ll p ro vid e d sub sta ntia l c o ntrib utio ns. And re w He a le y, Susa nna Mo urato , G iles Atkinso n and Ann N etten, o f the Perso nal and So cial Services Research Units at the Lo ndo n Scho o l o f Eco no mics, University Co lleg e Lo ndo n and the University o f Kent at Canterbury also kindly ag reed to allo w us to use so me o f their material in this study.

Finally, this wo rk builds o n the effo rts o f o ther co st o f crime researchers aro und the wo rld. In pa rtic ula r, the pio neering wo rk o f Ted Miller, Ma rk Co hen a nd Bria n W iersema a t the N atio nal Institute o f Justice in the US has helped accentuate the impo rtance o f this type o f wo rk and to further its acceptance into the po licy debate.

Sam Brand Richard Price

Eco no mics and Reso urce Analysis Unit Ho me O ffice

O cto ber 2 0 0 0

ii

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iii

Executive summary

Every day decisio ns are made by po licy makers and manag ers in the Criminal Justice System which reflect implicit judg ements abo ut the relative serio usness o f different crimes, o r abo ut the benefits o f pursuing o ne appro ach to reducing crime rather than ano ther. This study represents a first step to wards making such judg ements mo re explicit and in making sure they better reflect the available evidence o n the impacts o n so ciety o f different types o f crime.

Co st o f crime estimates can play an impo rtant ro le in helping the g o vernment to achieve the g reatest impact o n crime fo r the mo ney spent. They can be used in bo th appraisal and evaluatio n o f crime reductio n po licies, such as tho se in the G o vernment’s evidence-based Crime Reductio n Pro g ramme. They can help us to prio ritise, fo cusing scarce reso urces o n po lic ies tha t ha ve the b ig g est impa c t o n ha rm c a used b y c rime, ra ther tha n simply the number o f crimes. Mo reo ver, o ne o f the two aims o f the Criminal Justice System (CJS) is “ to reduce crime and the fear o f crime and their so cial and eco no mic co sts” . This study repo rts o n pro g ress to wa rds a c o st o f c rime mea sure tha t c a n b e used to a ssess perfo rma nc e ag ainst this aim. Fig ures used here represent the best available evidence, but nevertheless needs to be much impro ved. The aim o f this repo rt is to stimulate debate and impro vements in the evidence.

The study co ncentrates larg ely o n o ffences falling under no tifiable o ffence categ o ries.¹ N o t all crimes are included in the study. The co sts o f drug trafficking and po ssessio n, handling sto len g o o ds, public o rder o ffences, o ther lo w-level diso rder, fare evasio n, summary and no n-summary mo to ring o ffences and o ther summary o ffences are no t estimated.² The study do es no t, therefo re, attempt to estimate the co sts o f all crime, but rather a subset o f crime where reliable info rmatio n is available o n the co st and the number o f o ffences co mmitted.

In o rder to g et a true picture o f the to tal impacts o f crimes in no tifiable o ffence categ o ries, we need to estimate the actual number o f crimes in these categ o ries, rather than the number o f crimes reco rded. An appro ach has been devised which, as far as po ssible, links the to tal estimated number o f o ffences in a g iven year to chang es in the number o f o ffences reco rded b y the po lic e in tha t ye a r. The British C rime Surve y ha s b e e n use d to e stima te a c tua l numbers o f o ffences where po ssible. Table 1 g ives details o f the o ffence types fo r which averag e co st estimates are presented.

v 1 O ffences that po lice fo rces reco rd and are required to repo rt to the Ho me O ffice.

2 The co st o f the criminal justice respo nse is included in to tal fo r drug o ffences, mo to ring o ffences and o ther summary o ffences, as is the co st o f accidents invo lving illeg al speed. These are, ho wever, ackno wledg ed to be o nly partial estimates o f the full co st o f these o ffences.

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Table 1: Notifiable offence categories in this study

Crime category Sub-categories included in this study Notifiable offence codes³

Vio lence ag ainst Ho micide 1 -9 ; 1 1 -1 5 ; 3 7 .1

the perso n Mo re serio us o ffences (excluding Ho micide) Less serio us o ffences

Co mmo n assault 1 0 4 ; 1 0 5

Sexual o ffences 1 6 -2 7 ; 7 4

Ro bbery Ro bbery o f perso nal pro perty 3 4 A; 3 4 B

Ro bbery o f business pro perty

Burg lary Burg lary and ag g ravated burg lary 2 8 -3 1 in a dwelling

Burg lary and ag g ravated burg lary no t in a dwelling

Theft and handling Theft o f a vehicle 3 7 .2 ; 3 9 -4 9 ; 1 2 6 sto len g o o ds Theft fro m a vehicle

Attempted theft o f/ fro m a vehicle Theft fro m a sho p (including

theft by an emplo yee/ o ther) Theft o f co mmercial vehicle Theft fro m co mmercial vehicle O ther theft (including theft

o f pedal cycle,theft fro m perso n, o ther theft,but no t handling sto len g o o ds)

Fraud and fo rg ery⁴ 5 1 -5 3 ; 5 5 ; 6 0 ; 6 1 ;

8 1 4

Criminal damag e Criminal damag e ag ainst 5 6 -5 9

individuals/ ho useho lds Criminal damag e ag ainst

co mmercial/ public secto r

vi

3 As g iven in Appendix 3 o f Criminal Statistics 1 9 9 8 (Ho me O ffice, 1 9 9 8 a).

4 O nly to tal co sts are estimated fo r fraud and fo rg ery.

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‘ Co sts o f crime’ in this paper refer to the full rang e o f impacts o f crime, appro ved where po ssible in mo netary terms – tho ug h this do es no t sug g est that it is either straig htfo rward o r always rig ht to reduce the co nsequences o f any crime into purely financial terms. Co sts are incurred in anticipatio n o f crimes o ccurring (such as security expenditure and insurance administratio n co sts), as a co nsequence o f criminal events (such as pro perty sto len and damag ed, emo tio nal and physical impacts and health services), and respo nding to crime and tackling criminals (co sts to the criminal justice system).

Co sts have been measured using surveys o f victims, such as the British Crime Survey and Co mmercial Victimisatio n Survey, and estimates o f industry turno ver and co sts, such as the security and insurance industries. Reso urce co st estimates fo r the criminal justice system have been derived fro m a mo del develo ped by the Ho me O ffice to track flo ws and co sts thro ug h the criminal justice pro cess. Emo tio nal and physical impacts o f crime are, fo r the time being , estimated using fig ures fo r peo ple’s willing ness to pay to avo id ro ad traffic accidents, but wo rk is underway to derive better estimates reflecting mo re accurately o f the impacts o f crime o n victims.

Averag e co sts o f crime vary widely between o ffence categ o ries. The mo st co stly pro perty c rime s a re the ft o f ve hic le s, c o sting a ro und £ 4 ,7 0 0 p e r inc id e nt.⁵ Burg la rie s c o st a n averag e o f £ 2 ,3 0 0 , and criminal damag e aro und £ 5 0 0 . Perso nal crimes are far mo re co stly o n averag e than pro perty crimes. Ho micides have been estimated to co st at least £ 1 millio n, with o ther vio lence ag ainst the perso n co sting o n averag e £ 1 9 ,0 0 0 per incident.

Ro bberies incur co sts o f almo st £ 5 ,0 0 0 o n averag e. Co mmo n assault is the least co stly perso nal crime, with an averag e co st o f aro und £ 5 0 0 per o ffence.

The to tal co st o f crime to Eng land and W ales in 1 9 9 9 / 2 0 0 0 is estimated at aro und £ 6 0 billio n, altho ug h this fig ure is still far fro m co mprehensive, as it do es no t include impo rtant co sts such as fear o f crime o r quality o f life impacts. Table 2 sho ws ho w this £ 6 0 billio n is split, by type o f co st (such as pro perty sto len, security expenditure and criminal justice system reso urces) and by o ffence categ o ry (such as vio lence, ro bbery o r burg lary). Aro und £ 1 9 billio n o f the to tal co st o f crime is the co st o f pro perty sto len o r damag ed. N early £ 1 8 billio n o f the to tal is the direct emo tio nal and physical impact o n victims o f crime, with a little o ver

£ 1 4 billio n o f this incurred as a result o f vio lent crime. The respo nse to crime by the CJS co nstitutes aro und 2 0 per cent o f the to tal co st o f crime, at aro und £ 1 2 billio n. Identifiable co sts in anticipatio n o f crime – security expenditure and insurance administratio n co sts – came to o ver £ 5 billio n, the bulk o f this being security expenditure.

vii Executive summary

5 All fig ures are g iven in 1 9 9 9 prices.

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viii The economic and social costs of crime

Table 2: Summary of average and total cost estimates, by crime type and cost category

In response In anticipation of crime (£) As a consequence of crime (£) to crime (£)

Pro perty Emo tio nal and Criminal Number of TOTAL

Security Insurance sto len and physical impact Lo st Victim Health Justice System Average incidents COST O ffence catego ry expenditure administratio n damaged o n victims o utput services services (incl. Po lice) cost (£) (000s) (£ billion)

Crime against individuals and households

Vio lence against the perso n 2 - - 1 3 ,0 0 0 2 ,5 0 0 1 0 1 ,2 0 0 2 7 0 0 1 9 ,0 0 0 8 8 0 1 6 .8

Ho micide - - - 7 0 0 ,0 0 0 3 7 0 ,0 0 0 4 ,7 0 0 6 3 0 2 2 ,0 0 0 1 ,1 0 0 ,0 0 0 1 .1 1 .2

W o unding (serio us and slight) 2 - - 1 2 ,0 0 0 2 ,0 0 0 6 1 ,2 0 0 2 ,7 0 0 1 8 ,0 0 0 8 8 0 1 5 .6

Serio us wo unding 1 0 - - 9 7 ,0 0 0 1 4 ,0 0 0 6 8 ,5 0 0 1 3 ,0 0 0 1 3 0 ,0 0 0 1 1 0 1 4 .1

O ther wo unding 0 - - 1 2 0 4 0 0 6 2 0 0 1 ,3 0 0 2 ,0 0 0 7 8 0 1 .5

Co mmo n assault 0 - - 2 4 0 2 0 6 - 2 7 0 5 4 0 3 ,2 0 0 1 .7

Sexual o ffences 2 - - 1 2 ,0 0 0 2 ,0 0 0 2 0 1 ,2 0 0 3 ,9 0 0 1 9 ,0 0 0 1 3 0 2 .5

Ro bbery/ Mugging 0 4 0 3 1 0 2 ,4 0 0 4 2 0 6 1 9 0 1 ,4 0 0 4 ,7 0 0 4 2 0 2 .0

Burglary in a dwelling 3 3 0 1 0 0 8 3 0 5 5 0 4 0 4 - 4 9 0 2 ,3 0 0 1 ,4 0 0 2 .7

Theft 4 0 3 0 3 1 0 1 6 0 1 0 0 - 6 0 6 0 0 7 3 0 0 4 .4

Theft (no t vehicle) - 2 0 1 3 0 1 0 0 4 0 - 9 0 3 4 0 3 ,8 0 0 1 .3

Vehicle theft 7 0 5 0 5 0 0 2 2 0 2 0 0 - 3 0 8 9 0 3 ,5 0 0 3 .1

Criminal Damage 1 0 2 0 1 9 0 2 0 0 3 0 0 - 6 0 5 1 0 3 ,0 0 0 1 .5

All crime against individuals

and ho useho lds (£ billio n) 0 .7 0 .5 4 .1 1 7 .0 2 .9 0 .0 1 .3 5 .7 2 ,0 0 0 1 6 ,4 0 0 3 2 .2

Commercial and public sector victimisation

Burglary no t in a dwelling 9 0 0 5 0 1 ,2 0 0 - 4 0 - - 4 9 0 2 ,7 0 0 9 6 0 2 .6

Theft fro m a sho p 3 0 - 5 0 - - - - 2 0 1 0 0 3 1 ,0 0 0 3 .1

Theft o f co mmercial vehicle 3 ,4 0 0 1 ,5 0 0 4 ,6 0 0 - 6 0 - - 7 0 9 ,7 0 0 4 0 0 .3

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ix Executive summary

Theft fro m co mmercial vehicle 2 4 0 1 1 0 3 2 0 - 1 0 - - 3 0 7 0 0 6 0 0 .0

Ro bbery o r till snatch 1 ,2 0 0 1 0 0 1 ,5 0 0 5 9 0 1 2 0 - 5 0 1 ,4 0 0 5 ,0 0 0 7 0 0 .4

Criminal damage 3 4 0 2 0 4 4 0 - 3 0 - - 6 0 8 9 0 3 ,0 0 0 2 .6

All co mmercial and public

secto r victimisatio n (£ billio n) 3 .2 0 .2 4 .2 0 .0 0 .1 0 .0 0 .0 1 .4 2 6 0 9 .1

Fraud and forgery

All fraud and fo rgery (£ billio n) 1 .1 - 1 0 .3 - - - - 0 .6 - 9 2 0 0 1 3 .8

Traffic and motoring/ other non-notifiable offences

Illegal speed - - - - - - - - - - 0 .9

Drug o ffences - - - - - - - - - - 1 .2

O ther indictable

no n-mo to ring o ffences - - - - - - - - - - 1 .0

Indictable mo to ring o ffences - - - - - - - - - - 0 .5

Summary no n-mo to ring o ffences - - - - - - - - - - 0 .4

Summary mo to ring o ffences - - - - - - - - - - 0 .8

All traffic and mo to ring/ o ther

no n-no tifiable o ffences (£ billio n) - - - 0 .7 0 .2 - 0 .0 3 .9 - - 4 .8

TOTAL COST OF CRIM E (£ billion) 4 .9 0 .6 1 8 .6 1 7 .7 3 .3 0 .0 1 .3 1 1 .6 - - 5 9 .9

No tes:

1 . Figures may no t sum to to tal due to ro unding erro rs 2 . - indicates that no figure has been estimated

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The a ve ra g e c o st e stima te s g ive n in this stud y a re b e st e stima te s o f c o sts g ive n the info rmatio n available, but are inevitably imprecise. The quality o f the available evidence o n the co sts o f crime is g o o d in so me cases, patchy in many, and po o r in several. So me co sts, suc h a s the fea r o f c rime, o r the impa c ts o f c rime o n vic tims’ fa milies, ha ve no t b een estimated, due to lack o f data o r lack o f appro priate techniques thro ug h which to g ather data. So me co sts are based o n estimates fro m o ther fields o f research. The co st estimates are therefo re sensitive to chang es in assumptio ns made o r to impro vements in the quality o f the suppo rting data.

Thro ug ho ut the study we attempt to hig hlig ht the pro blems with, and g aps in, the evidence, and to identify the prio rities fo r further wo rk to ensure that these estimates can be used with g reater co nfidence. N ew metho ds need to be develo ped to estimate the co sts o f the fear o f crime and precautio nary behavio ur undertaken to reduce the risk o f beco ming a victim o f crime. Better estima tes a re needed fo r the emo tio na l a nd physica l impa ct o n victims o f c rime , he a lth se rvic e c o sts, c e ntra l a nd lo c a l g o ve rnme nt re so urc e s d e vo te d to c rime preventio n, and po lice reso urces. The Ho me O ffice has co mmissio ned new research o n the emo tio nal and physical impact o f vio lent crime o n victims in o rder to fill what is po ssibly the mo st uncertain and impo rtant g ap in o ur kno wledg e.

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Section I Introduction

W hy measure the costs of crime?

Crime impo ses a hug e co st o n so ciety. Estimates fro m a number o f recent studies rang e widely fro m £ 3 5 billio n to £ 6 0 billio n per year.⁶ The po tential saving s to individuals and ho useho lds, businesses and the public secto r fro m effective crime reductio n measures are therefo re extremely la rg e. Co st o f c rime estima tes in this study sho w, fo r exa mple, tha t achieving the G o vernment’s targ et o f a 3 0 % reductio n in thefts o f and fro m vehicles by 2 0 0 4 c o uld le a d to sa ving s to so c ie ty o f a ro und £ 1 b illio n. A c o st o f c rime me a sure therefo re pro vides a justificatio n fo r reso urces spent o n reducing crime, and pro vides an indicatio n o f ho w successful the G o vernment is at reducing the impacts o f crime.

Estima te s o f the so c ia l a nd e c o no mic c o sts o f c rime⁷ c a n ha ve a n imp o rta nt ro le in a c hie ving the g re a te st imp a c t o n c rime fo r the mo ne y sp e nt. The y c a n inc re a se the awareness o f bo th po licy-makers and the public in g eneral o f the full impact o f crime o n so ciety and the po tential g ains that co uld result fro m reductio ns in crime. Estimates o f the co sts o f individual crimes enable us to make better-info rmed decisio ns abo ut which po licy measures are the mo st effective, by allo wing meaning ful co mpariso ns to be made o f the co sts and benefits o ffered by alternative crime reductio n measures. They can also help us to prio ritise , fo c using sc a rc e re so urc e s o n po lic ie s tha t ha ve the b ig g e st impa c t o n ha rm caused by crime, in additio n to the number o f crimes.

The estima tes c a n b e used b o th fo r po lic y appraisal– to va lue the likely b enefits fro m implementing alternative po licy pro po sals, and so weig h these up ag ainst the likely co sts o f implementatio n – and po licy e valuatio n– identifying the size and value o f the benefits that ha ve a c c rued fro m a po lic y. As in o ther po lic y a rea s, c o st-b enefit a na lysis c a nno t fully enco mpass po litical o r equity dimensio ns o f appraisal and evaluatio n, and it is o nly o ne o f a numb e r o f c o mp le me nta ry te c hniq ue s. It d o e s, ho w e ve r, p ro vid e a g o o d b a sis fo r answering many key questio ns abo ut crime and crime preventio n, such as:

1 6 Fo r Eng land and W ales

7 Thro ug ho ut this paper we use the co ncept o f “ so cial co st” in its eco no mic sense – that is, the full impact o n so c ie ty. The te rms ‘ so c ia l c o st’ , ‘ e c o no mic c o st’ a nd ‘ so c ia l a nd e c o no mic c o st’ a re the re fo re use d interchang eably in this study. This includes co sts impo sed o n individuals, ho useho lds, businesses o r institutio ns by crimes they suffer directly (private co sts) and wider impacts o n so ciety as a who le thro ug h, fo r example, respo nses to the perceived risk o f crime (external co sts). The so cial co st o f crime therefo re includes bo th financial co sts reflected in expenditure, and ‘ no tio nal’ co sts reflecting best assessments o f the less tang ible impacts o f crime, such as the emo tio nal and physical impact o n victims.

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● ho w can we use o ur existing reso urces in the mo st effective way?

● ho w can we reduce the to tal co st o f crime to so ciety?

● what is the co rrect level o f reso urcing fo r crime reductio n activity?

● sho uld we c o nc entra te o nly o n preventing c rime o r sho uld we do mo re to mitig ate its co nsequences?

Reasons for publishing this paper

This research paper serves a number o f purpo ses:

● To make public and o pen to debate research that the Eco no mics and Reso urce Analysis Unit o f the Ho me O ffice has been eng ag ed in o ver the last two years, to share info rmatio n and hig hlig ht majo r finding s. The repo rt will ensure that the fig ures are o pen to scrutiny, so that they can be impro ved and g aps in the data can be filled.

● To p ro vid e info rma tio n fo r the C rime Re d uc tio n Pro g ra mme (C RP), a c o mprehensive ra ng e o f initia tives b uilding o n a n evidenc e b a se o f ‘ wha t wo rks’ in reducing crime, and aimed at achieving the g reatest impact o n crime fo r the mo ney spent. An analysis o f the co sts and benefits o f all CRP pro jects will be a key part o f the evaluatio n and future develo pment o f the pro g ramme.

Estimates o f the co st o f crime will allo w us to estimate the saving s g enerated thro ug h CRP initiatives. These saving s can then be co mpared with the co sts to sho w ho w co st-effective the initiatives have been.

● To e na b le C rime a nd Diso rd e r p a rtne rship s, lo c a l g o ve rnme nt o ffic ia ls, crimino lo g ists, po lice, priso n and pro batio n service manag ers and tho se in o the r o p e ra tio na l a g e nc ie s to c a rry o ut c o st-b e ne fit a na lyse s tha t a re c o mprehensive a nd c o nsistent. The pa per a ims to b e a c c essib le to a nyo ne wo rking in the field o f crime reductio n.

● To pro vide a b a sis fo r the develo pment o f a perfo rma nc e mea sure fo r the C rimina l Justic e Syste m (C JS). In the C JS Stra te g ic Pla n 1 9 9 9 -2 0 0 2 the G o vernment has set the CJS the o bjective o f reducing the eco no mic co st o f

2

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crime by 3 1 March 2 0 0 2 . The CJS Business Plan 2 0 0 0 -2 0 0 1 no tes that “ the co sts to be tracked have been determined. A pro g ramme will be published in Summer 2 0 0 0 o n the data available fo r tho se co sts and detailing the wo rk co ntinuing during 2 0 0 0 -2 0 0 1 to impro ve data which is currently sketchy.” A targ et fo r the reductio n in the co st o f crime is to be set by 3 1 March 2 0 0 1 . This publicatio n identifies the co verag e o f the co sts that will be tracked, the data that is currently available, and further wo rk that is o r will be happening in 2 0 0 0 -2 0 0 1 to impro ve the accuracy o f the estimates.

There are stro ng links between these different aims. A hig h-level understanding o f the main imp a c ts o f c rime a nd the re la tive se rio usne ss o f d iffe re nt typ e s o f c rime is vita l in hig hlig hting areas where criminal po licy needs to fo cus. Co st-benefit analysis o f alternative measures can help to info rm the Criminal Justice System and o ther ag encies abo ut the mo st effective mix o f po licies to bring do wn the co st o f crime.

The estimates given in this study are far fro m co mprehensive – rather, they represent a first step to wards a co mprehensive set o f estimates. Bo th the metho do lo gy and the estimates will be revised o n the basis o f new info rmatio n and research. The study do es no t co ver the many issues invo lved in co st-effectiveness and co st-benefit analysis fo r appraisal o r evaluatio n. Mo re details o n appraisal and evaluatio n o f crime reductio n initiatives can be fo und in Dhiri and Brand (1 9 9 9 ).

W hy “ the economic cost of crime” as a performance measure?

O ne o f the two key aims o f the Criminal Justice System (CJS) is “to re duce crime and the fe ar o f crime and the ir so cial and e co no mic co sts”⁸. In suppo rt o f this aim, o bjective three co mmits the criminal justice system to “a re ductio n in the e co no mic co st o f crime by 3 1 March 2 0 0 2”.

The eco no mic, o r so cial, co st o f crime is essentially a measure o f the impacto f crime o n so ciety. It gives us a way o f measuring the impact o f po licies aimed at reducing crime and its co nsequences. So me crimes clearly have greater co nsequences than o thers. Fo r example, a murder has a greater impact o n so ciety than a sho plifting o ffence. A co st o f crime perfo rmance measure is desig ned to fo cus criminal justice system po licy-makers and practitio ners o n the mo st co st-effective so lutio ns to crime, by ensuring due acco unt is taken o f bo th the effectiveness o f crime preventio n measures and the relative serio usness o f different o ffences, rather than

3 Introduction

8 CJS Stra teg ic Pla n 1 9 9 9 -2 0 0 2 (Crimina l Justic e System, 1 9 9 9 ). The distinc tio n ma de in the Stra teg ic Pla n b e tw e e n ‘ so c ia l’ a nd ‘ e c o no mic ’ c o sts is no t ma d e in this d o c ume nt – the d e finitio n o f e c o no mic c o sts enco mpasses all po ssible so cial impacts.

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simply fo cusing o n the aggregate vo lume o f crime. Figure 1 .1 sho ws the striking difference in the relative impo rtance o f different crimes against individuals and ho useho lds⁹ when a) the vo lume o f o ffences is co nsidered, and b) the co st to so ciety is co nsidered.

Figure 1.1: Volume and cost of offences Volume:

Cost:

Fig ure 1 .1 refers o nly to crimes ag ainst individuals and ho useho lds – o ver 1 6 millio n crimes were estimated to be co mmitted in this categ o ry each year, at a to tal co st o f aro und £ 3 2 billio n. The relative pro po rtio ns sho wn in this fig ure will therefo re differ fro m tho se based o n a mo re co mprehensive set o f o ffence categ o ries.

4

Violence 5 3 %

Sexual offences 8 % Robbery 6 % Common assault 5 %

Burglary 8 % Theft of and from vehicles 1 0 %

O ther theft/ handling 4 %

Criminal damage 5 % Attempted vehicle theft 1 % Violence 5 %

Sexual offences 1 %

Common assault 1 9 %

Burglary 8 %

Theft of and from vehicles 2 0 % O ther theft/ handling 2 2 %

Criminal damage 1 7 %

Attempted vehicle theft 5 %

Robbery 3 %

9 Fig ure 1 .1 do es no t include crimes ag ainst the co mmercial and public secto r, fraud and fo rg ery, drug o ffences o r o ther no n-no tifiable o ffences.

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The re la tive impo rta nc e o f vio le nt c rime in c o mpa riso n w ith o the r, pro pe rty c rime s is marked. W hen we fo cus o n the vo lume o f o ffences vio lent crimes co me to aro und a quarter o f the to tal. W hen we fo cus o n the co st o f tho se o ffences rather than the vo lume, vio lent crimes co nstitute nearly three-quarters o f the to tal co st. This finding is o ne example o f the way in which co st o f crime estimates can help illuminate po tential areas where g ains may be made by new po licies o r the switching o f reso urces fro m o ne area to ano ther.

Co mpa riso ns o f the rela tive CJS reso urc es devo ted to preventing o r mitig a ting different o ffences can also be made. Estimates o f the averag e so cial co st o f different o ffence types c a n he lp d e c isio n-ma ke rs to a sse ss w he the r the a llo c a tio n o f re so urc e s b e tw e e n p ro g ra mme s in the C JS is suita b ly re la te d to the o ve ra ll imp a c t o f the c rime s e a c h pro g ramme seeks to address.^{1 0} Fo r example, CJS co sts are estimated to represent o ver half the to tal co st o f co mmo n assault, but o nly aro und o ne-tenth o f the to tal co st o f theft and handling o ffences.

Appendix 2 g ives info rma tio n o n ho w a c o st o f c rime perfo rma nc e mea sure c o uld b e co nstructed fro m the estimates in this study.

Previous research and estimates for other countries

The to tal co st o f crime has received attentio n in the past. Repo rts have been published by vario us o rg anisatio ns o n the to tal co st o f crime, using varying deg rees o f so phisticatio n in their calculatio ns. In 1 9 9 8 , the Asso ciatio n o f British Insurers (Asso ciatio n o f British Insurers, 1 9 9 8 b) calculated that the to tal co st o f crime exceeded £ 3 5 billio n. In 1 9 9 9 an Audit Co mmissio n Repo rt, Safety in N umbers (Audit Co mmissio n, 1 9 9 9 ), estimated the co st at

£ 5 0 billio n a year. In 2 0 0 0 a repo rt in the O bse rve rnewspaper (O bse rve r, 2 0 0 0 ) adapted fig ures fro m a paper published in the US (Anderso n, 1 9 9 9 ) to calculate that the annual co st o f crime in Britain was £ 6 0 billio n. These estimates are based o n different assumptio ns, c o ve r diffe re nt c rime s, c o sts a nd ye a rs. The y do no t imply tha t the c o st o f c rime ha s increased fro m £ 3 5 billio n to £ 6 0 billio n between 1 9 9 8 and 2 0 0 0 . N either is it clear that the similarity between so me o f these estimates and the to tal co st estimate in this study is mo re than co incidental, since the metho do lo g ies used differ, at least at the marg in.

A numb e r o f inte rna tio na l pa pe rs ha ve a tte mpte d to c o st c rime in o the r industria lise d co untries. Miller, Co hen and W iersema (1 9 9 6 ) investig ated the co st to victims in the US o f

5 Methodological issues and principles

1 0 It sho uld be no ted that o ther co nsideratio ns such as deterrence o r co nfidence in the CJS may also affect levels o f reso urcing .

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vio lent and pro perty crime, including “ pain and suffering ” , and fo und the to tal co st to be aro und $ 4 5 0 billio n per year. Co hen (1 9 9 8 ) attempted to estimate the mo netary value o f saving a hig h-risk yo uth fro m a lifetime o f delinquency and criminal activity. Ao s, Phipps, Barno ski and Lieb (1 9 9 9 ) have created a co st-benefit mo del to evaluate crime preventio n activities in W ashing to n State, USA, which co mpares the co sts o f crime preventio n activity with saving s to the criminal justice system and to victims. Palle and G o defro y (1 9 9 8 ) have described plausible estimates fo r the mo netary value o f o ffending in 1 9 9 6 to France, tho ug h this study do es no t pro vide estimates o f the pain and suffering o f victims. The to tal co st o f crime to Australia in 1 9 9 6 , inco rpo rating mo st o f the co st categ o ries in this paper, was estimated by W alker (1 9 9 7 ).

Total costs and average costs

The to tal co st o f crime (which has received the mo st attentio n in recent years) and averag e (o r unit) co sts o f crime are bo th useful. The to tal co sts o f crime is impo rtant in assessing the scale o f the impact o f crime. The to tal co st can also be bro ken do wn to g et a g o o d idea o f the mag nitude o f different types o f co st, o r o f the co ntributio n o f particular types o f crime to the to tal impact o n so ciety. Averag e co sts are vital in co nducting co st-benefit analyses to assess the value fo r mo ney o f individual po licy initiatives. Averag e co st o f crime estimates fo cus o n individual incidents, and allo w us to g et an idea o f the relative impacts o n averag e o f, fo r example, o ne theft o f a vehicle in co mpariso n with o ne ro bbery. Bo th are impo rtant in b ring ing d o w n the c o st o f c rime in the mo st e ffe c tive w a ys. This p a p e r p re se nts info rmatio n o n bo th to tal co sts and averag e co sts.

Structure of the paper

Section I deals with the ratio nale fo r estimating the co st o f crime, and fo r a co st o f crime perfo rmance measure.

Section II co nsiders ho w to define and co unt criminal activity fo r the purpo ses o f this exercise.

A metho d o f measuring the incidence o f actual victimisatio n and o f tracking this thro ug h time is develo ped, and its advantag es and disadvantag es discussed.

Section III explains so me key eco no mic co ncepts, and identifies and defines the different co st categ o ries and the co mpo nents o f each co st categ o ry that will be used in the exercise. A me tho d o lo g y fo r the me a sure me nt o f e a c h c o st c o mp o ne nt is c o nsid e re d . Alte rna tive

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measurement techniques including stated preference o r co nting ent valuatio n, surveys and valuatio n using market prices are hig hlig hted.

Section IV pro vides estimates o f the averag e co sts o f crime fo r a rang e o f different o ffence types, and to tal co st estimates by crime type and co st categ o ry. It g ives co mpariso ns with o ther estimates, and co nsiders the implicatio ns o f the estimates fo r crime reductio n and crime mitig atio n, fo r po licy develo pment and fo r CJS practitio ners.

Section V discusses ho w the co st estimates sho uld and sho uld no t be used. It attempts to ide ntify a re a s w he re o ur e stima te s ne e d impro ve me nt a nd hig hlig hts a re a s w he re no estimates are currently available. In the lig ht o f this discussio n, so me reco mmendatio ns fo r further wo rk are made.

Section VI c o nta ins a ppendic es o utlining the da ta so urc es used a nd ho w estima tes were derived, and Section VII co ntains a biblio g raphy and references.

7 Methodological issues and principles

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Section II Incidence of crime

Categorising types of crime

Defining what co nstitutes a crime o ften invo lves applying a rig id set o f rules to co mplex so cial interactio ns. Criminal activity rang es widely in sco pe, including , fo r example, murder, damag e to peo ple o r pro perty, intimidatio n, appro priatio n o f pro perty, taking pro scribed substances and fo rg ing bankno tes. Vario us metho ds have been devised to try to categ o rise these activities, but fo r co nsistency, the categ o ries used in this study are no tifiable o ffe nce cate g o rie s(the types o f o ffences that po lice fo rces reco rd and are required to repo rt to the Ho me O ffice). This captures the majo rity o f crimes that are likely to have the mo st severe impa c ts, a nd ma kes the pro c ess o f upda ting the fig ures a nd c o mpa ring them with the vo lume o f o ffences much simpler.

In additio n to the no tifiable o ffence categ o ries, so me no n-no tifiable o ffences which tend to b e re la tive ly le ss se rio us in na ture b ut so me time s ha ve g ra ve c o nse q ue nc e s a re a lso included. Driving abo ve the speed limit, fo r example, wo uld usually no t cause direct harm either to peo ple o r pro perty, and if detected, wo uld pro bably invo lve o nly a fixed penalty.

Ho w e ve r, so me time s, d riving o ve r the sp e e d limit c a use s o r c o ntrib ute s to a c c id e nts invo lving serio us injury o r lo ss o f life.

The crimes co vered by this study, and the sub-categ o ries that have been used to divide these categ o ries into meaning ful blo cks fo r analysis, are listed belo w in Table 2 .1 .

9

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Table 2.1: Notifiable offence categories in this study

Crime categ o ry Sub-categ o ries included in this study N o tifiable o ffence co des^{1 1}

Vio lence ag ainst Ho micide 1 -9 ; 1 1 -1 5 ; 3 7 .1

the perso n Mo re serio us o ffences (excluding Ho micide) Less serio us o ffences

Co mmo n assault 1 0 4 ; 1 0 5

Sexual o ffences 1 6 -2 7 ; 7 4

Ro bbery Ro bbery o f perso nal pro perty 3 4 A; 3 4 B

Ro bbery o f business pro perty

Burg lary Burg lary and ag g ravated burg lary 2 8 -3 1 in a dwelling

Burg lary and ag g ravated burg lary no t in a dwelling

Theft and handling Theft o f a vehicle 3 7 .2 ; 3 9 -4 9 ; 1 2 6 sto len g o o ds Theft fro m a vehicle

Attempted theft o f/ fro m a vehicle Theft fro m a sho p (including

theft by an emplo yee/ o ther) Theft o f co mmercial vehicle Theft fro m co mmercial vehicle O ther theft (including theft

o f pedal cycle,theft fro m perso n, o ther theft,but no t handling sto len g o o ds)

Fraud and fo rg ery^{1 2} 5 1 -5 3 ; 5 5 ; 6 0 , 6 1 ;

8 1 4

Criminal damag e Criminal damag e ag ainst 5 6 -5 9

individuals/ ho useho lds Criminal damag e ag ainst

co mmercial/ public secto r

1 0

1 1 As defined in Appendix 3 o f Criminal Statistics 1 9 9 8 (Ho me O ffice, 1 9 9 8 a).

1 2 O nly to tal co sts are estimated fo r fraud and fo rg ery.

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There are many crimes which are no t included in this list. O ffences relating to the po ssessio n o r trafficking o f drug s are no t included, o ther than pro perty crimes co mmitted to fund drug use , whic h a re inc lude d unde r b urg la ry, ro b b e ry a nd the ft.^{1 3} The numb e r o f no tifia b le o ffenc es fa lling under a n “ o ther no tifia b le o ffenc es” c a teg o ry, a nd the hug e numb er o f o the r, no n-no tifia b le , c rimina l a c tivitie s, suc h a s lo w -le ve l d iso rd e r, fa re e va sio n a nd

“breaches o f the peace” , which co uld po tentially have an impact o n so ciety, have no t been estimated. Fo r so me o f these crimes, limited co st info rmatio n is available. Fo r o thers, neither the number o f o ffences no r co st info rmatio n has been included. Table 3 .1 in Sectio n III g ives mo re details o f the co sts which are and are no t estimated in this study.

M easuring the incidence of crimes

W hilst the no tifiable o ffence categ o ries have been used to determine the type so f crime o n which this study will fo cus, the number o f no tifiable o ffences reco rded by the po lice have no t been used as a measure o f the incide nce o f crime. The number o f reco rded o ffences do es no t reflect the actual number o f o ffences co mmitted. The po lice can reco rd o nly tho se crimes that co me to their attentio n. So me incidents repo rted to the po lice are no t reco rded as a no tifiable o ffence, either because they may no t fall into a no tifiable o ffence categ o ry, o r because there may be insufficient evidence that a crime has actually taken place.

The British Crime Survey measures crimes ag ainst adults living in private ho useho lds in Eng land and W ales. The 1 9 9 8 survey estimated that, o f the crimes that can be co mpared with no tifiable o ffence categ o ries, “ less than half were repo rted to the po lice, and o nly abo ut half o f tho se that were repo rted were reco rded” (Mirrlees-Black, Budd, Partridg e and Mayhew, 1 9 9 8 ). In o ther wo rds, the true number o f o ffences ag ainst adults and ho useho lds was perhaps fo ur times that reco rded by the po lice. This co nclusio n is no w well kno wn and widely reco g nised in the CJS. O ffences that are no t co vered by the British Crime Survey, such as sho plifting o r fraud and fo rg ery, are likely to have much lo wer repo rting rates than tho se that are co vered. The to tal number o f incidents in all no tifiable o ffence categ o ries is therefo re likely to be sig nificantly mo re than fo ur times the amo unt reco rded by the po lice.

We need to kno w fo r each crime catego ry the actual number o f incidents o ccurring in England and W ales each year so that we can estimate the actual impact o f crime o n so ciety, no t just the

1 1 Incidence of crime

1 3 Bennett (2 0 0 0 ) no tes that, o f a sample o f arrestees in the seco nd develo pmental stag e o f the N EW -ADAM (N ew Eng lish and W elsh Arrestee Drug Abuse Mo nito ring ) pro g ramme, “ o ver two -thirds o f the hig hest-rate o ffenders (2 0 o ffences a mo nth o r mo re) repo rted using hero in o r crack/ co caine” (p. ix). N ine per cent o f all arrestees were hig h-rate o ffenders, using hero in o r crack/ co caine. This g ro up was estimated to be respo nsible fo r o ver half o f all repo rted o ffences. Fo rty-two per cent o f arrestees in the study tho ug ht that their drug use and crime were co nnected.

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Table 2.2: Estimated numbers of incidents, 1999-2000

Type of crime Recorded Crime M ultiplier on Source of multiplier Estimated number

April 1999 to recorded estimate of actual incidents

M arch 2000 offences 1999/ 2000

(000s) (000s)

Crimes against individuals and households

Violence against the person 3 8 7 2 .3 8 8 0

Ho micide 1 .1 1 .0 no ne 1 .1

O ther vio lence ag ainst the perso n 3 8 6 2 .3 BCS (1 9 9 8 ) 8 8 0

o f which: Mo re serio us o ffences 2 9 3 .6 BCS (1 9 9 8 ) 1 1 0

Less serio us o ffences 3 5 7 2 .2 BCS (1 9 9 8 ) 7 8 0

Common assault 1 9 4 1 6 .7 BCS (1 9 9 8 ) 3 ,2 0 0

Sexual offences 3 8 3 .5 BCS (1 9 9 8 ) 1 3 0

Robbery

Ro bbery fro m individuals 7 2 5 .8 BCS (1 9 9 8 ) 4 2 0

Burglary

Burg lary in a dwelling 4 4 3 3 .2 BCS (1 9 9 8 ) 1 ,4 0 0

Theft and handling

Theft fro m the perso n 7 6 9 .9 BCS (1 9 9 8 ) 7 6 0

Theft o f a pedal cycle 1 3 1 3 .5 BCS (1 9 9 8 ) 4 6 0

Theft o f vehicle 3 2 1 1 .2 BCS (1 9 9 8 ) 3 8 0

Theft fro m vehicle 5 6 6 3 .9 BCS (1 9 9 8 ) 2 ,2 0 0

Attempted vehicle theft 1 5 7 6 .1 BCS (1 9 9 8 ) 9 5 0

O ther theft and handling 6 3 9 4 .0 estimate 2 ,6 0 0

12 The economic and social costs of crime

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Table 2.2 continued

Criminal Damage

Ag ainst individuals o r ho useho lds 4 7 3 6 .3 BCS (1 9 9 8 ) 3 ,0 0 0

Crimes against commercial and public sector Robbery

Ro bbery o f business pro perty 1 2 5 .8 CVS (1 9 9 4 ) 7 0

Burglary

Burg lary no t in a dwelling 4 6 4 2 .1 estimate 9 6 0

Theft and handling

Theft fro m a sho p 2 9 2 1 0 0 .0 estimate 2 9 ,0 0 0

Theft o f co mmercial vehicle 0 N / A CVS (1 9 9 4 ) 4 0

Theft fro m co mmercial vehicle 0 N / A CVS (1 9 9 4 ) 6 0

Theft by emplo yees (co mm/ public secto r) 1 7 1 5 .3 CVS (1 9 9 4 ) 2 7 0

Theft by o thers (co mm/ public secto r) 0 N / A CVS (1 9 9 4 ) 1 ,4 0 0

Criminal Damage

Ag ainst co mmercial/ public secto r 4 7 3 6 .3 estimate 3 ,0 0 0

Fraud and forgery

Fraud and fo rg ery 3 3 5 4 2 .6 N ERA (2 0 0 0 ) 9 ,2 0 0

N o tes:

1 . So urce fo r reco rded crime statistics: Table 6 , Ho me O ffice Statistical Bulletin 1 2 / 0 0 (2 0 0 0 ).

2 . BCS = British Crime Survey. The number o f crimes upo n which the BCS multiplier estimates in Table 2 .2 are based are adapted fro m Table 4 .1 and Appendix C o f the 1 9 9 8 British Crime Survey (Mirrlees-Black et al., 1 9 9 8 ). The estimated number o f actual incidents are different fro m tho se quo ted in the British Crime Survey because they have been adjusted to include crimes ag ainst under-1 6 s and crimes reco rded by the British Transpo rt Po lice.

3 . CVS = Co mmercial Victimisatio n Survey (Mirrlees-Black and Ro ss, 1 9 9 5 ).

4 . N ERA = N atio nal Eco no mic Research Asso ciates. N ERA (2 0 0 0 ) estimated the to tal actual number o f fraud and fo rg ery o ffences, rather than a multiplier o n reco rded o ffences. The multiplier estimate is therefo re the to tal estimated number o f o ffences divided by the number o f reco rded o ffences.

5 . Fig ures may no t sum to to tals due to ro unding .

6 . So urces o f unpublished multiplier estimates: Ho micide – assumed that all o ffences are reco rded. O ther theft and handling – ro ug hly equal to the multiplier fo r all BCS crime, and fo r all co mparable BCS pro perty theft. Burg lary no t in a dwelling^{1 4}– half the BCS estimate fo r burg lary in a dwelling . Theft fro m a sho p – based o n survey o f literature o n nature and extent o f sho plifting by Farring to n (1 9 9 9 ). Criminal damag e ag ainst co mmercial and public secto r – multiplier assumed equal to multiplier fo r criminal damag e ag ainst individuals and ho useho lds.

13 Incidence of crime

142.1 = [(3.2-1)/2]+1

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impact o f tho se crimes that are repo rted o r reco rded. The British Crime Survey go es so me way to achieving this. Ho wever, crimes co mmitted against co mmercial o r public secto r targets (e.g. theft fro m a sho p), o r where there is no direct victim (e.g. handling sto len go o ds, so me fraud and fo rgery), are no t co vered by the survey, tho ugh it is believed that under-reco rding might be much higher for some of these offences. For these crimes alternative data sources have been explo red.

A multiplier approach to counting crimes?

The appro ach taken to co unting crimes has been determined larg ely by the need to track chang es in the co st o f crime o ver time, fo r the co st o f crime perfo rmance measure. This requires a system o f co unting crimes that can be readily updated and is no t subject to wide variatio ns in data quality o ver time.

Fo r this reaso n an appro ach has been devised that, as far as po ssible, ties the estimated to tal number o f incidents to chang es in the number o f reco rded o ffences. Fo r each crime, a multiplier has been calculated equal to the ratio o f the actual estimated number o f crimes to the number o f crimes reco rded. Multipliers have g enerally been calculated fo r the calendar year 1 9 9 7 in o rder to allo w co nsistent co mpariso n between the British Crime Survey and reco rded o ffences. W here no clear basis fo r calculating a multiplier exists, a fig ure has been estimated. W here it is hig hly unlikely that the number o f actual o ffences is related to the number o f reco rded o ffences, and an estimate fo r the actual level o f victimisatio n exists, this estimate has been used fo r each year rather than a fixed multiplier.

O nce multipliers have been calculated fo r all the o ffences o f interest, they are applied to the mo st recent reco rded crime fig ures – April 1 9 9 9 to March 2 0 0 0 at the time o f publicatio n – to co nstruct a to tal number o f incidents fig ure fo r each categ o ry. Table 2 .2 g ives details o f reco rded crimes, multiplier estimates and their so urces, and the estimated to tal number o f incidents fo r April 1 9 9 9 to March 2 0 0 0 . (See pag es 1 2 and 1 3 ).

Confidence in the estimates

So me o f the e stima te s g ive n in Ta b le 2 .2 a re c le a rly mo re ro b ust tha n o the rs. Tho se e stima te s d e rive d fro m a c o mp a riso n o f British C rime Surve y d a ta a nd c o mp a ra b le reco rded crime fig ures are mo re ro bust than tho se estimates based o n expert o pinio n but little ha rd da ta . Even fo r these estima tes, the rela tio nship b etween the a mo unt o f crime reco rded by the po lice and the amo unt o f crime estimated by the British Crime Survey may

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chang e o ver time. Mirrlees-Black et al. (1 9 9 8 ) sho w that trends in reco rded crime, repo rted crime and BCS crime have differed so mewhat between 1 9 8 1 and 1 9 9 7 . This pro blem is particularly acute where repo rting rates have histo rically been lo w but may no w be rising , such as fo r do mestic vio lence o r racially-mo tivated o ffences. In April 1 9 9 8 the po lice crime reco rding rules chang ed in a number o f ways. Altho ug h the estimated o ne-o ff effect o f these c o unting rule c ha ng es ha s b een a c c o unted fo r, differenc es in the types o f o ffenc e no w rec o rded rela tive to the previo us c rime c o unting rules ma y a ffec t the future rela tio nship between reco rded and actual levels o f crime.^{1 5}

Even where the British Crime Survey o ffers a n estima te, this ma y no t b e a c c ura te. Fo r do mestic vio lence a nd sexua l o ffences in pa rticula r, there a re fa cto rs a t wo rk tha t ma y disto rt the true pic ture – fo r e xa mple , vic tims ma y b e unwilling to re po rt inc ide nts to interviewers where they have a clo se relatio nship with the o ffender, o r where the o ffender may be present when co mpleting the survey. The British Crime Survey do es no t publish its estimate o f the level o f sexual victimisatio n due to co ncerns o ver the accuracy o f the results.

A self-c o mpletio n mo dule wa s intro duc ed in the 1 9 9 4 sweep o f the survey (Perc y a nd Mayhew, 1 9 9 7 ). This resulted in a much hig her co unt o f sexual victimisatio n than estimated either by po lice reco rded crime o r British Crime Survey estimates o f victimisatio n. Ho wever, the estima te ra ised a s ma ny q uestio ns a s it a nswered. In pa rtic ula r, the self-c o mpletio n respo nses mag nified an issue already present in the main survey – that many victims did no t co nsider what happened to them to be a crime, but rather “ just so mething that happens” , even tho ug h what happened was leg ally a crime. This issue serves to hig hlig ht the tentative nature o f the multiplier estimate, and whilst the standard BCS estimate o f the number o f sexual o ffences used in this study is likely to underestimate the true level o f victimisatio n, no reliable co nclusio ns can be drawn abo ut the extent o f underestimatio n.

Fra ud, the ft fro m a sho p a nd ha ndling sto le n g o o ds a re o the r a re a s whe re multiplie r estima tes a re pa rtic ula rly tenta tive. The estima te o f just o ver 9 millio n fra ud o ffenc es is drawn fro m a repo rt o n the eco no mic co st o f fraud (N ERA, 2 0 0 0 ) co mmissio ned by the Ho me O ffice and the Serio us Fraud O ffice as part o f the develo pment o f a co st o f crime perfo rmance measure fo r the criminal justice system. The repo rt ackno wledg es the partial nature o f this estimate and the fact that it is no t suitable fo r tracking the to tal number o f o ffences each year.^{1 6}

1 5 Incidence of crime

1 5 Fro m 2 0 0 0 , the British Crime Survey will be run annually, o n an increased sample size. This sho uld allo w mo re reg ular mo nito ring and, if necessary, updating o f the multiplier estimates.

1 6 The N ERA estima te o f the numb er o f inc idents o f fra ud ea c h yea r is b a sed o n a summa tio n o f pub lished info rmatio n fro m many different so urces, including HM Custo ms and Excise, the Department o f Health, the Department o f So cial Security, the British Bankers Asso ciatio n and many o thers.

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Theft fro m a sho p is a no ther hug ely under-repo rted o ffenc e. Estima tes o f the numb er o f custo mer thefts are pro vided by the Co mmercial Victimisatio n Survey (CVS) (Mirrlees-Black and Ro ss, 1 9 9 5 ) and the Retail Crime Survey 1 9 9 8 (British Retail Co nso rtium, 1 9 9 9 ). The CVS co unted nearly 6 millio n custo mer thefts in 1 9 9 3 , and the Retail Crime Survey nearly 4 millio n in 1 9 9 7 . These estimates, ho wever, require the retail o utlet o r head o ffice to be aware that the theft has taken place. Farringto n (1 9 9 9 ) bro ught to gether a number o f studies o n sho plifting.

He no ted tha t po lic e rec o rded c rimes reflec ted o nly b etween 1 in 1 0 0 a nd 1 in 1 0 0 0 sho plifting incidents in two department sto res studied in 1 9 8 4 . Self-repo rt data fro m vario us studies also sug g ested that between 1 in 4 0 and 1 in 2 5 0 sho plifting o ffences led to a co nvictio n o r cautio n.^{1 7} G iven the uncertainties invo lved in these calculatio ns, this study has taken a fairly co nservative appro ach and assumed 1 0 0 o ffences per reco rded o ffence.

N o estimates were made o f the number o f handling sto len g o o ds o ffences, drug s o ffences, o ther no tifiable o ffences, traffic and mo to ring o ffences o r o ther no n-no tifiable o ffences.

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1 7 There were nearly 1 2 0 ,0 0 0 o ffenders cautio ned o r co nvicted o f theft fro m a sho p in 1 9 9 8 (Criminal Statistics, 1 9 9 8 ). If each o ffender has been co nvicted o r cautio ned fo r 2 acts o f sho plifting o n averag e, and if we use Farring to n’s central assumptio n o f 1 cautio n o f co nvictio n fo r every 1 5 0 o ffences, we find that there were aro und 1 2 0 ,0 0 0 x 2 x 1 5 0 = 3 6 millio n o ffences. There were 2 8 1 ,0 0 0 reco rded o ffences o f theft fro m a sho p in 1 9 9 8 -9 9 . Dividing the 3 6 millio n by 2 8 1 ,0 0 0 g ives us a multiplier o f aro und 1 2 8 .

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Section III M ethodological issues and principles

Key principles

Economic cost

This study uses the terms “ eco no mic co st” and “ so cial co st” to mean to full impact o f crime o n so c iety, to individua ls, ho useho lds, b usinesses a nd institutio ns, a nd enc o mpa ssing b o th

“financial” impacts o f crime and allo wing a “ no tio nal” value fo r impacts which are no t fully o r directly reflected in the financial co nsequences o f crime - such as trauma and physical injury. A distinctio n is so metimes made between the “ eco no mic” and “ so cial” co sts o f crime.

Eco no mic co sts in this distinctio n are taken to mean financial co sts – co sts that can be readily expressed in cash terms, such as sto len pro perty o r the co st o f a priso n place. So cial co sts are taken to mean the impacts o n so ciety that canno t be readily expressed in cash terms.

This distinctio n, ho wever, is a false o ne, reflecting practical difficulties with estimatio n rather than any real differences. It wo uld be misleading and inco mplete to measure the eco no mic co st o f crime in terms o nly o f tho se co sts that are already expressed in cash terms as this wo uld o mit impo rtant impacts o f crime and so wo uld tell o nly part o f the sto ry. Crimes such as ro bbery o r vio lence against the perso n, which have significant ‘intangible’ co sts, wo uld appear much less serio us than they actually are, whilst o ther crimes wo uld appear relatively mo re serio us. It is therefo re impo rtant to try and quantify all the impacts o f crime in co mmo n terms as far as po ssible. Mo ney can be used in this situatio n simply as a means o f co mparing o ne thing (e.g.

the physical impact o f a bro ken leg) with ano ther (e.g. the co st o f a ho spital bed).

This study treats the eco no mic and the so cial co sts o f crime as o ne and the same, and ho lds that, where at all po ssible, estimates sho uld be made fo r all the impacts o f crime. Simply including co sts which are easiest to measure o ften means excluding co sts which have the mo st se ve re impa c ts – suc h a s the physic a l a nd e mo tio na l suffe ring o f vic tims, to the detriment o f info rmed decisio n-making .

Opportunity cost

O pportunity cost is a central concept in economics. Measuring the opportunity costs of crime is a key method of valuing the economic cost of crime to society. According to “The G reen Book” (HM Treasury, 1997), the opportunity cost of a resource is “the value of the resource in its most valuable alternative use” . The co ncept o f o ppo rtunity co st allo ws us to value the human, physical and financial resources that will be ‘freed up’ for potential alternative uses when a crime is prevented.

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G enerally, the best measure o f the o ppo rtunity co st o f a reso urce is its market value, o r price.

Fo r example, the o ppo rtunity co st o f a burg lar alarm co sting £ 1 0 0 is equal to the £ 1 0 0 that canno t then be used to buy g ro ceries. Ho wever, no t all reso urces have a market value. The emo tio nal suffering o f a perso n staying indo o rs at nig ht because o f the fear o f crime is no t traded o n the market, but still represents an o ppo rtunity co st to the extent that that perso n values g o ing o ut. N o n-traded o ppo rtunity co sts require different measurement appro aches.

Transfer payments

The leg al transfer o f reso urces fro m o ne party to ano ther o ccurs in many co ntexts within the leg al eco no my, fo r example thro ug h so cial security payments, subsidies o r g ambling . Such transfers are no t g enerally reg arded in themselves as a lo ss to so ciety. Crime to o invo lves so me similar transfers; fo r example, pro perty crimes invo lve a transfer o f pro perty fro m the victim to the o ffender. The fundamental distinctio n between a transfer and a lo ss to so ciety is the distinctio n between a wanted and an unwanted transfer. A burg lary, theft o r ro bbery invo lves an illeg al transfer o f pro perty that is unwante d by o ne party, the victim, and the transfer o f the pro perty o ut o f the leg al eco no my. This study treats transfers o ut o f the leg al eco no my and into the illeg al eco no my as co sts o f crime.

Insura nc e c la ims a lso invo lve a tra nsfe r o f re so urc e s. Po te ntia l vic tims w ho ta ke o ut insurance po licies in anticipatio n o f crime pay premiums to an insurance co mpany. Actual victims o f pro perty crime who have taken o ut an insurance po licy receive mo ney fro m the insurance co mpany. Hence reso urces have been transferred as a result o f a crime, fro m po tential victims with insurance to victims with insurance. Unlike pro perty that is transferred fro m victims to o ffenders, insurance has been entered into vo luntarily by bo th parties, and insurance claims are thus treated in this study as a transfer payment, no t as a lo ss to so ciety.

The o nly reso urces invo lved in insurance that represent a co st o f crime to so ciety rather than a transfer are the reso urces used in insurance administratio n. Insurance co mpanies require sta ff, premises a nd eq uipment in o rder to pro vide, check a nd pa y o ut o n po licies. The reso urces used in insurance administratio n represent an o ppo rtunity co stto so ciety, because in the absence o f crime these reso urces co uld be emplo yed in a pro ductive way elsewhere in the eco no my.

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The economic and social costs of crime

Munich Personal RePEc Archive

The economic and social costs of crime

Brand, Sam and Price, Richard

Home Office, London

October 2000

Online at https://mpra.ub.uni-muenchen.de/74968/

MPRA Paper No. 74968, posted 31 Dec 2016 11:09 UTC

Home Office Research Study 217

The economic and social costs of crime

Sam Brand and Richard Price

Home Office Research Studies

The Research, Development and Statistics Directorate

Forew ord

Acknow ledgements

Contents

Executive summary

Table 1: Notifiable offence categories in this study

Table 2: Summary of average and total cost estimates, by crime type and cost category

Section I Introduction

W hy measure the costs of crime?

Reasons for publishing this paper

W hy “ the economic cost of crime” as a performance measure?

Figure 1.1: Volume and cost of offences Volume:

Cost:

Previous research and estimates for other countries

Total costs and average costs

Structure of the paper

Section II Incidence of crime

Categorising types of crime

Table 2.1: Notifiable offence categories in this study

M easuring the incidence of crimes

Table 2.2: Estimated numbers of incidents, 1999-2000

Table 2.2 continued

A multiplier approach to counting crimes?

Confidence in the estimates

Section III M ethodological issues and principles

Key principles

Economic cost

Opportunity cost

Transfer payments