Costs and Benefits of Preventing Crime

Brandon Welsh, David P. Farrington, Lawrence Sherman

• Publisher: Routledge
• Year: 2018
• eBook ISBN: 9780429980893
• Topic: Social Sciences
• Subtopic: Sociology
• Index: Social Sciences

What are the cost savings from preventing a typical burglary, robbery, assault, or even a criminal career? Who benefits from these savings? How often do the benefits from preventing crime or criminal behavior exceed the resources spent on preventing or controlling crime? Is it more cost-effective to invest in early childhood programs or juvenile boot camps to reduce criminal offending? These are some of the important questions that face policymakers in crime and justice today. Answering them is no easy task. Nevertheless, it is important to provide answers in order to ensure that the dollars devoted to crime reduction are spent as efficiently as possible. The principle aim of Costs and Benefits of Preventing Crime is to report on and assess the present state of knowledge on the monetary costs and benefits of crime prevention programs. Remarkably, this crucial topic has rarely been studied up to the present time. This book examines key methodological issues, reports on the most up-to-date research findings, discusses international policy perspectives, and presents an agenda for future research and policy development on the economic analysis of crime prevention. Throughout, it addresses the important question of how governments should be allocating scarce resources to make crime prevention policy and practice more effective and to produce the greatest economic benefits to society. The book brings together research and perspectives from across North America, Europe, and Australia.

Part One
Introduction

Assessing the Economic Costs and Benefits of Crime Prevention

BRANDON C. WELSH
DAVID P. FARRINGTON

The economic costs and benefits of crime prevention programs and policies are very important topics nationally and internationally, but they remain relatively neglected as areas of research. In recent years in the United States, Canada, the United Kingdom, and other industrialized countries, there has been a growing interest on the part of governments and other stakeholders in identifying the monetary value of crime prevention actions through the use of economic evaluation techniques, such as benefit-cost (or cost-benefit) analysis. Many of these countries have begun to reorient their crime prevention (and criminal justice) policies around an evidence-and efficiency-based model, looking to put in place programs with demonstrated effectiveness and cost savings. This has occurred for many reasons, including rising criminal justice costs—particularly in the area of prisons (Maguire and Pastore 1998)—evidence of the magnitude of the financial costs of crime and victimization to society (Miller, Cohen, and Wiersema 1996; Cook et al. 1999), governmental fiscal restraints, a movement toward general efficiency practices in government (Waller and Welsh 1999), and growing evidence of the effectiveness of alternative, noncriminal justice approaches to preventing crime (Tremblay and Craig 1995; Wasserman and Miller 1998).

Arguments such as "for every dollar spent, seven dollars are saved in the long run" (Schweinhart, Barnes, and Weikart 1993) have proved very powerful. Indeed, benefit-cost studies conducted over the last twenty years demonstrate that many different crime prevention strategies, such as early childhood intervention, situational prevention, and offender treatment, hold much promise in reducing the monetary costs associated with crime and paying back public and private investments in prevention programs (Welsh and Farrington 2000b).

Discussions of the economic efficiency of crime prevention programs can be very persuasive and have gained wide appeal in political, policy, and, more recently, academic settings. In many ways, the interest in attaching dollar values to crime prevention programs can be seen as an outgrowth of the focus on "what works" in preventing crime. Efficiency, performance measures, and targeting resources (among other terms) have become the common currency of discussions about crime prevention. However, compared to the number of outcome evaluation studies of crime prevention programs, which themselves are relatively few (Sherman et al. 1997, 1998), there is a dearth of benefit-cost analysis studies in this area. This is also true in many other prevention and intervention areas such as child and adolescent mental health (Knapp 1997) and substance abuse (Plotnick 1994; Rajkumar and French 1997; Bukoski and Evans 1998).

The lack of research on the economics of crime prevention underscores the need for caution in making general claims of cost savings or cost-effectiveness. Present critiques of research on the costs of crime and economic analysis of crime prevention programs and policies (e.g., Zimring and Hawkins 1995) have drawn attention to the ease with which the readily understood metric of dollars has been used, especially at the political level, to advance the policy or legislative agenda of the day. In the United States, for example, this has involved claims that the benefits of prisons and their primary aim of incapacitation far outweigh the costs of constructing facilities and housing and supervising offenders (Zedlewski 1987; Dilulio and Piehl 1991). Often missing from these claims have been rigorous and comprehensive benefit-cost analyses that are needed to describe accurately the economic contribution made by these programs to taxpayers and society at large.

The principal aim of this book is to report on and assess the present state of knowledge on the economic costs and benefits of crime prevention. The book examines key methodological issues, reports on the most up-to-date research findings, discusses international policy perspectives, and presents an agenda for future research and policy development on the economic analysis of crime prevention. Throughout, it addresses the important question of how governments should be allocating scarce resources to make crime prevention policy and practice more effective and to produce the greatest economic returns to society It brings together research results and perspectives from across North America, Europe, and Australia.

This book comprises ten chapters, and there are four main parts: methods and perspectives of economic analysis, economic analysis findings, international policy perspectives on the economics of preventing crime, and future directions for research and policy development.

Methods and Perspectives of Economic Analysis

Chapters 1 and 2 deal specifically with methodological perspectives in performing economic analyses of crime prevention programs. Many of the chapters in Parts III and IV of this book also report on important methodological features of economic analysis, but chapters in these two parts are principally concerned with findings of economic analyses and international policy perspectives on the economics of preventing crime, respectively For readers unfamiliar with the technical jargon and methodology of economic analysis, the present section will serve as a useful background.

An economic analysis can be described as a tool that allows choices to be made between alternative uses of resources or alternative distributions of services (Knapp 1997, 11). Many criteria may be used in economic analysis. The most common is efficiency, which is the focus throughout this book. Efficiency is essentially about achieving maximum outcomes from minimum inputs.

Benefit-cost analysis and cost-effectiveness analysis are the two most widely used techniques of economic analysis. A cost-effectiveness analysis can be referred to as an incomplete benefit-cost analysis: No attempt is made to estimate the monetary value of program effects produced (benefits), only resources used (costs). Benefit-cost analysis, on the other hand, monetizes both costs and benefits and compares them. A cost-effectiveness analysis makes it possible to specify for example, the number of crimes prevented per $1,000 expended on each program. Another way to think about how benefit-cost and cost-effectiveness analyses differ is that "cost-effectiveness analysis may help one decide among competing program models, but it cannot show that the total effect was worth the cost of the program" (Weinrott, Jones, and Howard 1982, 179), unlike benefit-cost analysis.

An economic analysis is a step-by-step process that follows a standard set of procedures: (1) define the scope of the analysis, (2) obtain estimates of program effects, (3) estimate the monetary value of costs and benefits, (4) calculate present value and assess profitability, (5) describe the distribution of costs and benefits (an assessment of who gains and who loses; e.g., program participant, government/taxpayer, crime victim), and (6) conduct sensitivity analyses (Barnett 1993, 143-48). In the case of benefit-cost analysis, all of the six steps are carried out; for cost-effectiveness analysis, the third and fifth steps are omitted.

Barnett (1993, 1996) and Barnett and Escobar (1987, 1990) have discussed the application of these steps in the context of early childhood intervention programs, and we adopt this useful methodology to discuss the application of benefit-cost analyses to crime prevention programs in general. By no means is the following meant to serve as a comprehensive guide to carrying out benefit-cost analyses. Comprehensive texts on benefit-cost analysis such as Layard and Glaister (1994) and Boardman et al. (1996) should be consulted.

Define the Scope of Analysis

This step can be divided into two parts: First, define the alternatives to be compared (e.g., participation in a program versus nonparticipation); second, identify the limits of the comparison (Barnett 1993, 144). A determination is made at this stage about the perspective the economic analysis will take. The "public" (government/taxpayer and crime victim) and the "society" (government/taxpayer, crime victim, and program participant) are the two most common perspectives used in economic analyses of crime prevention programs. Other perspectives can include the government agency funding the program (e.g., probation, social services), participants of the program, or crime victims. (See Chapter 10 for a discussion of benefits according to the different perspectives.)

Another important element at this stage is the decision about what program outcomes are to be measured. Administrative issues (e.g., resources, time) or parameters of the study may limit the number of outcomes that can be measured. The best approach is to attempt to measure all of the relevant outcomes and, later, to estimate their monetary value independently (see the step on estimating monetary value).

Estimate Program Effects

Determining that a program prevented crimes requires an estimate of how many crimes would have been committed in the absence of the program and a disentangling of program effects on crime from all the other possible influences on crime. Program effects can be measured in different ways, with differing degrees of statistical power.

In practical terms, a benefit-cost analysis or any other type of economic analysis is an extension of an outcome evaluation, and is only as defensible as the evaluation upon which it is based. Weimer and Friedman recommend that benefit-cost analyses be limited to programs that have been evaluated with an "experimental or strong quasi-experimental design" (1979, 264). The most convincing method of evaluating crime prevention programs is the randomized experiment (Farrington 1983), which is often referred to as the "gold standard" of evaluation designs. The key feature of randomized experiments is that the experimental and control groups are equated before the experimental intervention on all possible extraneous variables. Hence, any subsequent differences between them must be attributable to the intervention.

However, the randomized experiment is the most convincing method of evaluation only if a sufficiently large number of units is randomly assigned to ensure that the program group is equivalent to the control group on all possible extraneous variables (within the limits of statistical fluctuation). As a rule of thumb, at least fifty units in each category are needed (Farrington 1997). This number is relatively easy to achieve with individuals but very difficult to achieve with larger units such as areas, schools, or prisons. For larger units such as areas, the best and most feasible design usually involves before-and-after measures in experimental and control areas, together with statistical control of extraneous variables. Nonrandomized experiments and before-after designs without a control group are less convincing methods of evaluating crime prevention programs.

In Chapter 2, Faye Taxman and Brian Yates report on the design of planned benefit-cost and cost-effectiveness analyses of a randomized controlled experiment comparing seamless integration of criminal justice and psychological services (e.g., coerced treatment with testing and sanctions) to traditional criminal justice services (e.g., supervision with testing) for drug-abusing offenders. Their approach goes beyond the usual focus of economic analyses on outcomes by systematically analyzing the relationships among costs, treatment procedures, psychological and related processes, and outcomes (Cost → Procedure → Process → Outcome Analysis, or CPPOA). This allows for a detailed examination of how relationships between program resources (costs) and outcomes produced by programs (benefits) may be enhanced or diminished by a variety of programmatic, community interpersonal, and psychological variables. This is a rare but extremely valuable application of economic analysis techniques to assessing alternative crime prevention programs.

Estimate Monetary Value

The estimation of the monetary value of program resources used (costs) and effects produced (benefits) is the most important step in an economic analysis. As described by Barnett, "This step makes it possible to put all program consequences on an equal footing, so program costs, various positive outcomes, and any negative outcomes can be aggregated to provide a single measure of the program's impact on society and on particular sub-groups of society" (1993, 145). It is also the step that distinguishes a benefit-cost analysis from a cost-effectiveness analysis, which does not attempt to estimate the monetary value of program effects. Estimating the monetary value of costs is considered less complex than benefits, but no less important.

The most crucial issue involved in carrying out benefit-cost analyses is deciding what program resources used and effects produced should have dollar figures attached. No prescribed formula exists for what to include (or exclude). Prest and Turvey note that benefit-cost analysis "implies the enumeration and evaluation of all the relevant costs and benefits" (1965, 683). Estimating the monetary value of program benefits requires a great deal of ingenuity on the part of the evaluator. Unlike program costs, which can most often be broken down into operating (e.g., overhead, administration) and capital (e.g., rental of facilities), program benefits are disparate and involve a number of assumptions in order to arrive at reasonable estimates of monetary value. Program benefits often consist of costs avoided. This book's conclusion, Chapter 10, discusses the need for the development of a standard list of costs and benefits that should be measured as part of benefit-cost analyses of crime prevention programs.

Other important issues that must be addressed at this stage of an economic analysis include the use of average or marginal costs and benefits, accounting for the borrowing of money to pay for large-scale capital intensive projects, the inclusion of intangible victimization costs (e.g.,...

Table of contents

• Cover
• Half Title
• Title
• Copyright
• Contents
• List of Tables and Figures
• List of Acronyms
• Foreword
• Preface
• Part I Introduction
• Part II Methods and Perspectives of Economic Analysis
• Part III Economic Analysis Findings
• Part IV International Policy Perspectives
• Part V Future Directions
• About the Editors and Contributors
• Index