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A recent study estimates the aggregate burden of crime is $1.7 trillion. The report also sheds light




When you listen each night to the local newscast or open up the newspaper, there is usually a report about some form of crime being committed. Whether it’s a town, city or state, no place is immune to such crimes as robberies, drive-by shootings, homicides, burglaries or rape.

The average citizen may be empathetic toward a crime victim; however, is he or she really susceptible to the long-term effects? The answer is “yes,” to the tune of $4,118 apiece, according to a recent study on the “domino effect” of crime.

“The Aggregate Burden of Crime,” study by David A. Anderson from the University of Chicago calculates the total public- and private-sector expenditures on combating crime on an annual basis. The study, published in the October 1999 Journal of Law and Economics, sheds light on this domino effect that ultimately influences those living in the United States.

Each year, criminals seize about $603 billion in assets from victims and produce more than $1.1 billion in lost productivity, crime-related expenses and forsaken quality of life.  Ultimately, the aggregate “cost of crime” is more than $1.7 trillion in the United States each year, says the study.

Why so high? Anderson concludes that crime is not just the cost of lost goods, such as credit cards, stereos, jewelry and cash. The total cost of crime also includes the lost productivity in society that comes from spending time preventing crime, whether that means taking time to lock your door or to punch in your alarm system code.

Moreover, the study believes the real cost of crime includes entire industries. Using Anderson’s logic, the entire $32.2 billion electronic security industry is a waste of time and money. However, society’s burden from crime also presents a strong case for alarm dealers to use during a sales presentation. The next time a prospect’s objection is that “crime does not affect me,” you can quickly reply that “crime affects everyone.”

To make his case, Anderson dissects the effects of crime into four categories: crime-induced production; opportunity costs; the value of risks to life and health; and transfers. These categories break down the costs and help citizens understand that crime ultimately hits everyone in their pockets.

Crime Rates Declined in Early Part of 1999

From the moment a crime is committed, it becomes everyone’s burden, especially when your taxes pay to send that criminal through the justice system and perhaps onto county, state or federal prison. That’s just the public sector expenditures. What about the private sector expenditures?

War on Drugs Proves Costly to the Taxpayer

The President’s Commission on Organized Crime surmises that more than $160 billion in annual expenditures is attributed to drug trafficking. Each year, however, an estimated $26.7 billion and $1.5 billion in expenditures are caused from prenatal drug exposure to cocaine and heroin.

Adding Costs in the State, Federal Judicial System

Police protection is the next most expensive type of crime-induced production. More than $47 billion is devoted toward serving and protecting citizens. Approximately 682,000 police and 17,000 federal, state, specialized (park, transit or county) and local police agencies make up that figure.

Realizing the Price Paid for Peace of Mind

The report suggests that the fear of crime has prompted Americans to spend $324 million annually on nonlethal weaponry, including defensive sprays and stun guns. In 1993, 32 percent of new homes were built with alarm systems and alarms sales reached $6.5 billion. Security industry experts estimate that residential security alone is a $5.4 billion market.

Diagnosing the Medical Care Costs From Crime

The most visible signs of crime-induced production are the medical and mental anguish suffered by the victims. Even in minor-injury cases, the cost to the victims is measured not by the dollar figures, but by the emotional toll.
Medical care due to crime costs approximately $2.5 billion yearly.

Opportunity Costs Stem From Lost Time, Wages

The aggregate burden of crime is not only measured by the value of lost or damaged property, but by the loss of time to the victim. For example, if a person is injured during a car jacking, he or she may have lost not only a vehicle, but also workdays. The National Crime Victimization Survey reports that 6.1 million workdays are lost to crime, an average of 3.4 days per infraction.

Transfer Costs Follow the Domino Effect

The “Aggregate Burden of Crime” study also looks at the effects of transfers to the bottom line. When fraud or theft is committed, a transfer of assets takes place from the victim to the criminal.

What Do the Aggregate Numbers Tell Us?

Anderson is quick to point out that the report calculates the aggregate burden of crime without focusing on absolute numbers. The data includes indirect costs, and admits that transfers due to theft should be omitted from the net burden of crime to society.


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