Friday, April 09, 2010

Another explanation for lower big-city crime

The textbook treatment of public goods leaves out a lot that goes on right before our eyes.  Where their benefits are focused on an identifiable space, many of these goods can be supplied by private means.  You cannot visit a major US downtown these days without encountering private law enforcement personnel, many of them financed by Business Improvemt Districts (BIDs).  This paper by Philip Cook and John MacDonald (which I had not seen until seeing it cited here in The Economist) makes the case that crime reduction via BIDs is cost-effective.

Measured crime is down in most US big cities and there are a variety of competing explanations.  Cook-MacDonald provide evidence that some of the credit goes to where few of the analysts have looked.  Also give credit to lawmakers that made BID creation legal. Yes, some coercion is involved.  If a super-majority of local businesses sign up, the others must join -- or move elsewhere.  But the crime-reduction benefits may also be cost-effective for the individual business.