Problems with measuring economic costs of crimes

In the Asia-Pacific, Police Forces have recently expressed a desire to academically measure the economic cost of crime as this would reportedly “provide valuable insights into operational policy-making resource reallocation and police’s strategies to deliver the mission.”  At first glance, efforts to inform the public, rationalize spending and offer a better measurement of policing efficiency seem worthy of public support and gratitude. After all, crime is often seen as one of the most serious non-traditional security issues. Yet, a closer look at the proposition to measure how much crime cost, reveals several problems that it may present.

Generally speaking, crimes fall into two categories: non-profit and profit driven ones. The former includes all acts driven by emotions, urges and ideas. The problem is that, by definition, these crimes are not committed for the purpose of acquiring any type of wealth and as such their potential economic “costs” can only be indirect. And indeed, some academics argue that it is possible to estimate the cost of these crimes in terms of the victim costs (medical expenses, counseling), criminal justice system costs, lost productivity estimates for both the victim and the criminal, and estimates on the public’s resulting willingness to pay to prevent future violence. In reality, such an estimate could be rough at best and in most cases rather absurd or controversial. While crude economic calculations can perhaps be helpful in measuring the scale and consequences of the security-related expenditures, they can also lead to a conclusion that some people (richer) are more “valuable” than others.

The problems with measuring the indirect costs of crimes apply also to the profit-driven offences. Yet, the very economic dimension of these crimes might suggest to some, that it could be possible and indeed desirable to measure their direct costs. However, this might turn out to be quite problematic. In order to understand why, it is important to note that there three basic types of profit-driven crimes: predatory, market-based and commercial. The first category involves crimes based on involuntary transfer of wealth. In this case, empirically speaking, the economic losses to victims are probably in a reverse relationship to the likelihood of violence:  a well-planned burglary is likely to bring in more “profit” and less violence than a mugging in a back-alley. Hence, economic cost logic would suggest that it would be more rational to protect rich institutions at the expense of all but the richest individuals, even if the latter were to experience more violence. A similar rationale could hint that nearly all police efforts should be aimed at fighting commercial crimes that involve serious (and hence costly) business frauds or breaches of trust. In the case of some market-based crimes, such as trade in pornography or drugs, it could create confusion since the mere act of prohibition might be seen as more costly than the crimes themselves.

This brings me to the main point. As it was observed by a prominent economist, in crime fighting moral considerations should always take precedence over crude economic calculations. After all, not everything that counts can be counted and not everything that can be counted counts.