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Economic and Social Effects of Crime - Determining Costs

Estimating the costs and effects of crime is important to authorities in the criminal justice system. Policymakers weigh the various costs posed by different crimes to determine which crime prevention measures have the highest priority. Researchers have tried different approaches in assessing the costs of crime. One approach has been to look at jury awards in civil suits. Juries in civil trials are often asked to determine the amount of money to be awarded to victims of crime. They consider medical expenses and property loss as well as compensation for pain and suffering.

Another source is insurance and government claims. When a victim suffers losses from crime, he may receive compensation from insurance companies or government relief agencies. These figures can also be used in determining the costs of crime. A third source in measuring the cost of crime is to study how much a person is willing to pay to avoid crime through such actions as purchasing expensive security devices.

Using these various sources, studies have estimated the cost associated with various types of crime. For example, the cost of larceny (theft) in 1993 was around $370 for each victim while murder was $2.9 million. One study estimated the savings to society by diverting a high-risk youth from potential crime was as much as $1.5 million per youth.

The High Cost of Crime

The following annual figures estimating the various costs of crime in the mid-1990s come from the National Institute of Justice and a study by David A. Anderson called "The Aggregate Burden of Crime." The study was published in the October 1999 issue of the Journal of Law and Economics. Crime costs are based on approximately 49 million annual crimes and attempted crimes in the United States.

$105 billion each year in medical bills and lost earnings; $450 billion when including pain and suffering and lost quality of life

$400 billion to operate corrections facilities

$130 billion for crime prevention and loss of potential productivity of criminals and inmates

$1 trillion when including the cost of the criminal justice systems, as well as private individuals and companies taking security measures

$426 billion of the $450 billion is related to violent crime, the remaining $24 billion to property crime

$4,118 is the annual cost of crime to each U.S. citizen

$603 billion lost to the economy from fraud and unpaid taxes

$500 million of money or valuables taken in robberies

$15 billion in property stolen

$127 billion from rape offenses; assault $93 billion, murder $61 billion, and child abuse $56 billion

$45 billion paid by insurance programs to crime victims

$8 billion paid to victims by U.S. government annually for restorative and emergency services

3 percent of all medical expenses in the nation is related to violent crimes

1 percent of annual U.S. earnings is equal to wage losses from violent crime

10 to 20 percent of mental healthcare costs are attributed to crime

$54,000 is the average cost of each arson incident; $31,000 for each assault

$25,000 to $30,000 is the annual cost of an inmate in prison

4 out of 5 gunshot victims end up on public assistance and uninsured, costing the government $4.5 billion annually



(From the National Center For Policy Analysis Web site at http://www.ncpa.org/pi/crime.html)

As opposed to street crime, white-collar crime is considered far more costly to society. It was estimated in the mid- 1990s that white-collar crime cost U.S. businesses as much as $400 billion a year, or about 6 percent of total revenue in the nation. Consumer fraud alone cost Americans about $45 billion each year.

Various agencies and organizations maintain statistics on the cost of crime in the United States though none cover the entire range of costs. They mainly focus on different aspects of criminal justice. The Bureau of Justice Statistics keeps track of expenses required to maintain effective criminal justice systems around the nation including employment costs. Other data addressing the costs to victims is available through the National Crime Victimization Survey (NCVS). No data gathering group, however, can accurately assess all of the long-term costs of crime.


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