Crime as a Social Cost of Poverty and Inequality: A Review Focusing on Developing Countries



Crime as a Social Cost of Poverty
and Inequality: A Review Focusing
on Developing Countries

f Bourguignon


more given exogenously by publie expenditures on crime deterrence. They
are supposed to be too small for deterrence to be effective. Risk now
depends on the organization of the illegal sector itself. For instance it
may be the probability of being killed by a competitor willing to control a
given territory for drug dealing. But the main economic factor pushing
toward crime remains the income people may get if they stay in legal
activities in comparison with the expected utility of illegal activity. In the
present framework as in the original model any fall in this level of income,
that is, any increase in urban poverty, increases the incentives to switch
to illegal activities. Unlike in the canonical model, however, it is not clear
that more or less inequality in society leads to more crime and violence.
This essentially depends on the way the illegal sector is organized and of
course on the size of that sector25.

Transforming the original model so as to account for the fact that crime
and violence often develop within poor districts of metropolitan areas in
connection with illegal activity rather than property crime, strictly
speaking, and with extremely low probability of being apprehended, does
not radically modify the initial analysis. It remains true that any increase
in urban poverty- should, other things being equal, result in an increase in
violence. It is also still the case - in fact a fortiori so -that increasing
effective crime deterrence should reduce the extent of violence-. A new-
determinant of the general level of crime and violence appears, however.
It is the importance of the market for illegal activity and the way- the
demand for the services supplied by that sector -drug consumption in the
first place- depends on the characteristics of the city or of the urbanization
process.

3. The Limited Available Evidence

on the Relationship between Inequality,
Poverty and Crime

The main conclusion of the preceding inductive analysis is that urban
inequality and poverty are the main economic determinants of crime and


ʒ A model at this type is explored in Bourguignon (1998)


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