Francesca Cornaglia and Andrew Leigh measure the impact of crime - and media reporting of crime - on the mental wellbeing of both victims and non-victimswellbeing, crime,

Andrew Leigh

Francesca Cornaglia

English

Research Papers in Economics

CentrePiece Winter 2011/12 
8
In 2006, the US Senate Committee on the Judiciary heard
evidence from two sources on the economic cost of crime.
The director of the Bureau of Crime Statistics told the
committee that according to surveys, the financial cost of
crime to victims and their families is $16 billion annually.
Immediately afterwards, economist Jens Ludwig told the
committee that, based on survey respondents’ willingness
to pay to reduce crime in their communities, the cost of
crime is $694 billion per year.
This 40-fold disparity between the direct costs to victims
and the wider community’s willingness to pay to reduce
crime suggests an intriguing notion. What if most of the
social cost of crime is not endured by victims but by 
non-victims? What if the financial impact of crime on
those who are killed, assaulted or robbed is just the tip of
the iceberg for calculating the costs of crime?
The idea that the costs of crime for non-victims may be
important was noted by Jeremy Bentham as long
ago as the late eighteenth century. He gave the
example of a man who is robbed on a road,
where the ‘primary mischief’ arises from the
physical harm and loss of possessions
occurring from the robbery, but the crime
also has a ‘secondary mischief’:
‘The report of this robbery circulates
from hand to hand, and spreads
itself in the neighbourhood. It finds
its way into the newspapers, and is propagated
over the whole country. Various people, on this
occasion, call to mind the danger which they and
their friends, as it appears from this example,
stand exposed to in travelling; especially such as
may have occasion to travel the same road.’ 
What is important about this effect of crime – which
Bentham referred to as ‘the alarm’ – is that it affects a
much larger number of people than the direct impact of
crime. As philosopher Jonathan Wolff pointed out in the
2005 Bentham lecture at University College London, even
if the probability of harm is very low, ‘the fear can be
ever-present for a great number of people, depressing
their lives’. The cost of crime may therefore be far larger
Crime and mental wellbeing
Crime has clear costs for its victims, but it might also cause considerable harm to
other local people who fear being victims in the future. Francesca Cornaglia and
Andrew Leigh measure the impact of crime on the mental wellbeing of both
victims and non-victims, as well as the effects of crime reporting by local media.
in brief...
Increases in 
crime rates have 
a negative impact 
on the mental
wellbeing of 
local residentsCentrePiece Winter 2011/12 
9
than commonly suggested by methods that evaluate only
the effects on victims and their immediate family.
In a new study, we combine detailed crime statistics with
panel survey data that provide detailed indicators of
mental wellbeing for the same people over a six-year
period, 2001-06. The ‘Household, Income and Labour
Dynamics in Australia’ (HILDA) survey combines measures
of respondents’ tiredness, difficulties with work and social
activities because of physical or emotional problems, and
nervousness and depression into an overall indicator called
the Mental Component Summary (MCS).
The HILDA data also include information on which people
have been crime victims. This makes it possible to examine
separately the effects that changes in crime in a local area
have on changes in the mental wellbeing of resident
victims and non-victims (controlling for changes in local
economic conditions).
There is a particular analytical challenge involved in
investigating the effects of being a victim of crime on
people’s mental wellbeing: the possibility of ‘sorting’ –
that certain people who are more likely to be victims of
crime may at the same time experience lower mental
wellbeing. As far as we know, no previous study has been
able to estimate the effects of different crimes on the
mental wellbeing of victims, taking account of the
potential selection of vulnerable individuals into incidences
of crime.
Our analysis finds a strong relationship between being a
victim of crime and mental wellbeing for both property
crimes and violent crimes: a seven percentage point fall in
the MCS for these people. Taking account of the potential
selection of vulnerable individuals suggests that sorting is
indeed a problem. Nevertheless, we still find a
considerable impact on mental wellbeing (a two
percentage point fall in the MCS), which is predominantly
driven by being a victim of a violent crime.
Turning to non-victims, we find significant and sizeable
effects of violent crime on the mental wellbeing of non-
victims in the local area. Distinguishing between different
categories of violent crime, it seems that these effects are
driven by incidences of assaults, including sexual assault,
and robbery. Thus, these results provide evidence for the
hypothesis that by reducing the wellbeing of non-victims,
the costs of crime may be substantial.
We also examine the role of local media coverage in
enhancing the effect on mental wellbeing of crime rates
within an area. Extensive coverage of crime incidences in
local newspapers may exacerbate the effect of criminal
activity on the mental wellbeing of non-victims. To our
knowledge, no previous work has quantified such effects
nor, more importantly, assessed the ‘multiplier’ effect of
area crime through media coverage on mental wellbeing.
We find that the intensity of reporting of crime increases
its negative effect on mental wellbeing. This suggests that
media reporting plays an important role in enhancing the
negative effect of crime on non-victims in the local area.
This article summarises ‘Crime and Mental Wellbeing’ by
Francesca Cornaglia and Andrew Leigh, CEP Discussion Paper
No. 1049 (http://cep.lse.ac.uk/pubs/download/dp1049.pdf).
Francesca Cornaglia is a research associate in CEP’s labour
markets and wellbeing programmes and a lecturer at Queen
Mary, University of London. Andrew Leigh, a former professor
of economics at the Australian National University, is a
member of the Australian House of Representatives.
Local media
coverage of
criminal activity
enhances the
negative effect 
of crime on
wellbeing

Crime and mental wellbeing

http://cep.lse.ac.uk/pubs/download/cp357.pdf

Crime and mental wellbeing

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