Law

Are U.S. Cities Underpoliced?

by on August 15, 2017 at 7:25 am in Economics, Law | Permalink

Aaron Chalfin and Justin McCrary have a forthcoming paper in the Review of Economics and Statistics that takes a new approach to estimate the effect of police on crime. If you run an ordinary regression using the number of police to explain the number of crimes you typically find small or even positive coefficients, i.e. the police appear to have no effect on crime or maybe even a positive effect. The usual explanation is endogeneity. The number of police influence the number of crimes but the number of crimes also influences the number of police. The recent literature has focused on breaking this endogeneity circle by finding a change in the number of police that is exogenous, i.e. random with respect to crime. My paper with Jon Klick, for example, uses random movements in the terror alert level combined with the fact that the police go on double shifts when the terror alert level rises to estimate the effect of police on crime in Washington, DC. If the assumption of exogeneity is satisfied then you have pulled a random experiment out of natural data, hence a natural experiment. Obviously, if the exogeneity assumption isn’t satisfied the technique doesn’t work. But even if the exogeneity assumption is satisfied there is another problem–by focusing only on changes in police and crime when the terror alert level changes you are throwing out most of the variation in the data so the estimates are going to be less precise than if you used more of the variation in the data.

Chalfin and McCrary acknowledge the endogeneity problem but they suggest that a more important reason why ordinary regression gives you poor results is that the number of police is poorly measured. Suppose the number of police jumps up and down in the data even when the true number stays constant. Fake variation obviously can’t influence real crime so when your regression “sees” a lot of (fake) variation in police which is not associated with variation in crime it’s naturally going to conclude that the effect of police on crime is small, i.e. attenuation bias.

By comparing two different measures of the number of police, Chalfin and McCrary show that a surprising amount of the ups and downs in the number of police is measurement error. Using their two measures, however, Chalfin and McCrary produce a third measure which is better than either alone. Using this cleaned-up estimate, they find that ordinary regression (with controls) gives you estimates of the effect of police on crime which are plausible and similar to those found using other techniques like natural experiments. Chalfin and McCrary’s estimates, however, are more precise since they use much more of the variation in the data.

Using these new estimates of the effect of police and crime along with estimates of the social cost of crime they conclude (as I have argued before) that U.S. cities are substantially under-policed.

Hat tip Kevin Lewis.

Addendum: After writing this post I discovered that I had covered the Chalfin and McCrary paper when it was a working paper, five years ago! This tells you something about how long it can take to get an economics paper published.

The mostly male crowd that participated in Friday night’s tiki-torch-lit rally did not cover their faces, and they were widely photographed. A Twitter account, @YesYoureRacist, began posting photographs of participants and uncovering their identities. White was among the first it named. The account would soon identify students enrolled at the University of Nevada and Washington State University, leading both of the schools to issue statements condemning racism.

And:

A white nationalist who participated in the torch-lit march through the University of Virginia’s campus this weekend has lost his job at a Berkeley, Calif., hot dog restaurant after Twitter users posted his photo and place of employment. The employee, Cole White, was identified online after he was photographed among a shouting and torch-wielding mob during the march Friday night in Charlottesville.

Effective social monitoring, or dangerous slippery slope?  Or both?  Sometimes the undercover sleuths are wrong (NYT).  Many colleges are being asked to expel those students.

Here is the full article, via Michael Rosenwald.

Remember the fiduciary rule, the one that “requires brokers to act in the best interests of savers and went into partial effect in June”?  Who could be opposed to such a thing?  But of course when a regulation sounds so very good, there is usually some other consideration around the corner, perhaps involving secondary consequences.  And, as some of us had predicted, it is not working out so well:

The rule requires brokers to act in the best interests of retirement savers, rather than sell products that are merely suitable but could make brokers more money. Financial firms decried the restriction, which began to take effect in June, as limiting consumer choice while raising their compliance costs and potential liability.

But adherence is proving a positive. Firms are pushing customers toward accounts that charge an annual fee on their assets, rather than commissions which can violate the rule, and such fee-based accounts have long been more lucrative for the industry. In earnings calls, executives are citing the Department of Labor rule, known varyingly as the DOL or fiduciary rule, as a boon.

“Primarily because of DOL” and market appreciation, assets are growing in fee-based accounts, said Stifel Financial Corp. SF 0.40% Chief Executive Ronald Kruszewski, on a call in July. In an interview, he said such accounts can be twice as costly for clients.

That is from Lisa Beilfuss at the WSJ.  Allison Schraeger is one who saw this coming.

The Economist has a lengthy and very informative article on this, here is one bit:

Another candidate to be the first ZEDE is a public-private partnership with Canadian investors to create an “energy district” in Olancho department, where wood would be harvested for fuel. The ZEDE itself would be confined at first to a 1.6 square km (0.6 square mile) patch, which will be occupied by a power station. But it could eventually expand to an area covering 8% of Honduras’s territory and including 380,000 people. HOI, a Christian NGO based in the United States, is to provide health care and education from the outset in this “area of influence”.

…Even now, just how ZEDEs will work is a matter of argument among their supporters. The law places effective control in the hands of investors and a “technical secretary” who will administer each zone (and must be a Honduran citizen). They are answerable to an independent “commission for best practices” (CAMP). Civil and criminal cases will be adjudicated by special ZEDE courts, though it is not clear whether each zone will have its own or whether they will join a single parallel system. They could employ foreign judges to hear civil and criminal cases, just as Honduran football teams hire foreign players, suggests Mr Díaz. A “tribunal of individual rights”, guided by international conventions, will protect residents. Its decisions can be appealed to international courts.

But this governance structure is not settled; participants do not agree on what has been decided or even on who is part of it. The original CAMP, appointed by Mr Lobo, had 21 members, including Grover Norquist, an American anti-tax campaigner, Richard Rahn, then of the libertarian Cato Institute in Washington, DC, and Mark Klugmann, a former speechwriter for Ronald Reagan. This body met just once, in March 2015, on the resort island of Roatán.

In short, the prognosis is still unclear, which I take to be bad news.  In any case, there is much more at the link.

From Lyman Stone:

…the survey-based immigration method finds essentially no increase in immigration after the immigration reforms of the 1960s: indeed inflow rates may have declined. The implication here is that rising foreign-born population has its roots well before any changes to immigration law, and may be as much about declining outflows as it is about rising inflows.

Notably, both estimates give a similar 1940-Present estimate of average annual migration: 0.51% for the survey method, 0.57% for the category method. The category method is inflated by that bump around the 1950s, which was largely temporary, seasonal illegal immigration. Adjusted for that, it’s about 0.52%. In other words, both methods give similar long-run migration rates, at a long-run average level somewhat lower to the long-run average level in the previous migration period.

But the trend is different. The survey-based method suggests immigration rates peaked around 1970 and have fallen since. The category-based method suggests that immigration rates peaked in the 1990s, and have fallen since.

The longer piece covers a variety of other related topics, including stocks in addition to flows (longer lives and lower native fertility skew the stock), and the connection between immigration and pro-natalist policies.  Via Ross Douthat.

From Levy and Rodrik:

What is striking is that this dualism has worsened during the period of Mexico’s liberalizing reforms. Research by one of us (Levy) shows that informal firms have absorbed a growing share of the economy’s resources. The cumulative growth of employment between 1998 and 2013 in the informal sector was a whopping 115%, compared to 6% in the formal economy. For capital, cumulative growth was 134% for the informal sector and 9% for the formal sector.

The short article is interesting throughout.

That is my latest column for Bloomberg, here is one bit from it:

In other words, a country can experience hundreds of years of bad events, but if it succeeds in attaching itself to a benevolent, moderately competent protector, it still can have a fantastic future of peace and prosperity, even if it does not stand on the global cutting edge.

And:

If Macedonia doesn’t make it into the EU, it is not difficult to envision a future where the country ends up being picked apart by a variety of pressures from Russia, Serbia, Bulgaria, Albania and Greece, in some unknown combination. Keep in mind that an independent Macedonian nation has existed for only a few decades over the course of many centuries, and so its continuing existence cannot be taken for granted.

And:

But when it comes to economic development, don’t just look at demographics or economic policy. Ponder the hegemon.

I wish to thank J. and P. for conversations that spurred some of these thoughts.

ICE’s hope is that this privately developed software will help go far beyond matters of legality to matters of the heart. The system must “determine and evaluate an applicant’s probability of becoming a positively contributing member of society, as well as their ability to contribute to national interests” and predict “whether an applicant intends to commit criminal or terrorist acts after entering the United States.” Using software to this end is certainly in line with Trump’s campaign rhetoric — during a rally in Phoenix, he described how “extreme vetting” would make sure the U.S. only accepts “the right people,” using “ideological certification to make sure that those we are admitting to our country share our values and love our people.”

That is from The Intercept, by Sam Biddle and Spencer Woodman.  Here is Wikipedia on China’s proposed social credit score system, currently in experimental form.  What would Patrick McGoohan say?

Moral hazard from Sicilian volunteers

by on August 10, 2017 at 12:58 am in Economics, Law | Permalink

Fifteen volunteer firefighters have been arrested in Sicily on suspicion of starting wildfires and reporting non-existent blazes so they could earn €10 (£9) an hour for putting them out.

Police in Ragusa province, in the south of the Mediterranean island, said the fire department became suspicious when it emerged that the auxiliary brigade had responded to 120 incidents compared with just 40 tackled by other volunteer teams over the same period.

The brigade commander, a refrigeration technician identified as DDV, was deemed dangerous enough to be held under house arrest, the Ansa news agency reported, because he was suspected off continuing to start fires after others had stopped.

Most of the remaining team members, whose private phone calls were recorded as part of the investigation, have since admitted calling the 115 emergency number or getting friends or relatives to do so.

Here is the full story.

In West Virginia, the median hourly wage is just $14.79; in Arkansas, it’s $14.48; and in Mississippi, it’s a depressingly low $14.22.

That is from an excellent column by Catherine Rampell, do read the whole thing.

Thanks to a little-noticed auction sale, a South Bay couple are the proud owners of one of the most exclusive streets in San Francisco — and they’re looking for ways to make their purchase pay.

Tina Lam and Michael Cheng snatched up Presidio Terrace — the block-long, private oval street lined by 35 megamillion-dollar mansions — for $90,000 and change in a city-run auction stemming from an unpaid tax bill. They outlasted several other bidders.

Now they’re looking to cash in — maybe by charging the residents of those mansions to park on their own private street.

Here is the full story, via Mike Tamada and Elmar Nubbemeyer.

On Tuesday, Cuba’s government said it would suspend the issuance of permits for a range of occupations and ventures, including restaurants and renting out rooms in private homes.

The suspension included the growing field of private teachers, as well as street vendors of agricultural products, dressmakers and the relatively recent profession of real-estate broker.

The announcement did not say when the issuing of permits would resume and said that enterprises already in operation could continue.

Cuban President Raul Castro expanded an opening of the economy to private-sector employment in 200 categories of business in 2010. It later also legalized nonagricultural cooperatives.

The government has said nearly 570,000 people are employed in the enterprises, which include hundreds of restaurants and guest houses.

The latest moves have created fears that Cuba is putting the brakes on plans to reform its centrally planned economy, though officials said the country is not going back on its economic opening.

Here is more, via the excellent Mark Thorson.  Here are related stories, and here is my earlier bearish Bloomberg column on Cuba.

The economics of brideprice

by on August 6, 2017 at 12:08 am in Economics, Law | Permalink

There is a newly published article on that topic, by and , here is the abstract:

Approximately seventy-five percent of the world’s population lives in countries where asset exchange upon marriage is obligatory. Rising brideprice—money or gifts provided to a woman’s family by the groom and his family as part of marriage arrangements—is a common if overlooked catalyst of violent conflict. In patrilineal (and some matrilineal) societies where brideprice is practiced, a man’s social status is directly connected to his marital status. Brideprice acts as a flat tax that is prone to sudden and swift increases. As a result, rising brideprice can create serious marriage market distortions that prevent young men, especially those who are poor or otherwise marginalized, from marrying. This phenomenon is especially evident in polygamous societies, where wealthy men can afford more than one bride. These distortions incentivize extra-legal asset accumulation, whether through ad hoc raiding or organized violence. In such situations, rebel and terror groups may offer to pay brideprice—or even provide brides—to recruit new members. Descriptive case studies of Boko Haram in Nigeria and various armed groups in South Sudan demonstrate these linkages, while an examination of Saudi Arabia’s cap on brideprice and its efforts to arrange low-cost mass weddings illustrates the ways in which governments can intervene in marriage markets to help prevent brideprice-related instability. The trajectory of brideprice is an important but neglected early indicator of societal instability and violent conflict, underscoring that the situation and security of women tangibly affect national security.

For the pointer I thank the excellent Kevin Lewis.

…most important of all was the gulf between the man and the national media, who could not understand each other — Romney’s billboards in New Hampshire read THE WAY TO STOP CRIME IS TO STOP MORAL DECAY; he could not understand why newsmen found the slogan funny; and they could not understand what he meant by moral decay.

That is from the still-engaging Theodore H. White The Making of the President 1968.  And here is Rod Dreher on crime and morality.

That is the topic of my latest Bloomberg column, basically I defend Apple.  Here is one excerpt:

Those remarks are unfair to Apple, which in difficult circumstances probably did the right thing. China has already shown Facebook Inc. and Google parent Alphabet Inc. that it is willing to do without their services. How would it help the world to have Apple join that list, either partially or in full? I don’t approve of Chinese censorship, but the VPNs are in fact illegal. It hardly seems unreasonable for a major company to follow the laws of the country it is operating in, even if those laws are unjust or imprudent.

Go back to the banned status of Bloomberg View in China, which is also a ban on some of my writings. (My educational videos are also blocked because they are on YouTube.) Does that mean I should stop having my books translated into Chinese, or that I should refuse to speak at Chinese universities, on the grounds that they do not present all of my written product? No, hardly anyone behaves that way, nor should they. I prefer to try to communicate with the Chinese — including listening to and learning from them — as much as I plausibly can.

There is much more at the link.