On June 19, the Center for American Progress released a study entitled “The Economic Benefits of Reducing Violent Crime : A Case Study of 8 American Cities.” The report was put together by respected economists Dr. Robert Shapiro of Sonecon and Dr. Kevin Hassett of the American Enterprise Foundation, and suggests that reductions in the rates of violent crime would provide significant financial benefit in cities across the country by raising real-estate value and limiting crime-related municipal costs.
The study estimates the total annual cost – both the direct annual cost, and “the more intangible pain and suffering borne by the victims”- of violent crime to Philadelphia at $3.7 billion.
The authors saw a relation between violent crime rates and housing values that carried across cities:
Across five cities with the necessary data for out analysis, we found that a 10 percent reduction in homicides should lead to a 0.83 percent increase in housing values the following year, and a 25 percent reduction in homicides should produce a 2.1 percent increase in housing prices over the next year.
In Philadelphia, this means that a 10 percent reduction would increase the value of the real estate market by $3.2 billion, and a 25 percent reduction would increase housing values by $8 billion.
The report states that the rate of violent crime in Philadelphia is three times the national average, and that annual direct costs of violent crime comes out to $472 per resident. Although these statistics are rather grim, the authors finish the section on Philadelphia with the potential upside:
Reducing these crimes by 25 percent would generate $43 million for the
Philadelphia city budget, including $35 million in law enforcement and justice
system savings and $8 million in new revenues. This revenue would enable the
city to consider a mix of a cut in local property taxes of up to 11 percent or up to a
doubling of spending on homeless and housing assistance.