Hard Drugs Addiction, Drug Violations and Property Crimes in the US

Marco Cozzi

No 51, 2007 Meeting Papers from Society for Economic Dynamics

Abstract: This paper studies the effect of hard drugs addiction on property crimes and hard drugs selling in the US. A dynamic equilibrium model quantifying how much of the observed property crime rate is accounted for by hard drugs addiction is specified and estimated. The model is framed in both a rational addiction and a rational crime participation environment. It exploits information on drug use in the American population, hard drugs expenditure, property crimes and drug abuse violations, obtained from the National Household Survey on Drug Abuse, the Surveys of Inmates, and the Uniform Crime Reports of the FBI, respectively. The equilibrium features of the model allow to pin down the response of hard drugs consumers to changes in prices, as well as to compute the revenues from drug selling, variables which are not available in the existing data. Moreover, the equilibrium framework allows to exploit data asked exclusively to inmates: by taking the selection problem explicitly into account, the model can predict moments which are representative of the whole population. The results show that a substantial part of property crimes, approximately 26%, is accounted for by predatory crime to finance addiction. The estimated model is in turn used to perform counterfactual simulations to quantify the economic consequences of a compulsory drug treatment scheme for all arrested felons, and the effects of a legalization policy. The first policy experiment suggests a decrease in the property crime rate by 11%, while under the new legal regime the property crime rate is found to decrease by 18%.

Date: 2007
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