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Back to Archives | Back to July 2006 Contents 

The Economics of Prevention: Reducing Costs and Crime

By Alfonso E. Lenhardt, President and Chief Executive Officer, National Crime Prevention Council, Washington, D.C.






hat figure includes property losses, losses in productivity, medical expenses, and public program costs, as well as costs associated with pain, suffering, long-term emotional trauma, disability, and risk of death. The crimes involved are part 1 crimes, as measured by the FBI Uniform Crime Reports. These figures do not include the costs of such crimes as consumer fraud, identity theft, and computer hacking, largely because the data are not yet available to compute such costs reliably. There are some striking statistics for these additional costs:

  • Insurers pay $45 billion in crime-related costs annually to their policy holders.

  • Governments pay $8 billion for emergency and restorative services to victims.

  • Employers pay $5 billion annually because of violent crime.

  • Victims (or their survivors) pay $44 billion in tangible expenses other than services (for property loss, productivity loss, and insurance administration, for example) for murder, rape, robbery, assault, and abuse and neglect.

Crime's costs hurt every member of the community, not just its victims and their immediate families:

  • Taxpayers pay for law enforcement agencies to investigate crimes and to find and arrest suspects.

  • Taxpayers bear the costs for prosecuting (and sometimes defending) the accused, trying the case in court, and handling the costs of pretrial and post conviction confinement.

  • Public monies fund health care, education, rehabilitation, counseling, intervention, probation, parole, and more for both victims and offenders.

  • Insurance companies and their policyholders must cover losses for victims.

  • Victims often replace or repair stolen or damaged items at their own expense.

  • The families and children of those convicted and sent to prison frequently need to draw on public benefits to survive. Not all the costs of crime can be measured monetarily, although their burden is no less onerous.

Victim Blaming: The victim's family members may blame themselves as well as the victim, and the victim may blame himself or herself. Such blame can eat away at personalities and relationships, undermining emotional and physical health.

Lost Productivity: Employers and colleagues bear the cost of lost productivity as the employee deals with crime's aftermath. Some workers take unpaid leave to recover from injuries, deal with police and other criminal justice authorities, or attend medical or counseling appointments.

Psychological Effects: Victims may be fearful, depressed, or stressed, making them less effective on the job.

The cost of crime is monetary, physical, and psychological. Considering all of these factors, prevention programs are a sound return on investment. These programs save money and increase a sense of safety in the community. Law enforcement leaders, as well as others involved in crime prevention, need to make the case for prevention as a cost-effective policy option in local and national initiatives against crime.

Neighborhoods and Communities Face Costs as Well
Calculating the costs of crime to local neighborhoods is more difficult than working with established national data, but the costs are there. Property values decline, people move out, property damage needs to be repaired, businesses vacate or avoid the neighborhood, and people stay away from neighborhoods perceived as being unsafe. These costs, along with residents' loss of their sense of security, reduce the quality of life for all who live and work in the area.

The Allstate study Building Safe and Vital Communities, conducted by the National Crime Prevention Council, found that security is the top consideration of adults and teens in how they view their neighborhoods. When asked how they would spend $1,000 to change their neighborhoods, residents, both adults and teens, named education and public safety as their top priorities.2

Concern about crime unquestionably affects people's behaviors. ,Are We Safe? The 2000 National Crime Prevention Survey, conducted by the National Crime Prevention Council and ADT, documented the fact that tens of millions of Americans fear walking in their own neighborhoods after dark. A similar number reported that they have reduced their activities out of fear of crime. About half of Americans reported being less trusting of strangers, and four in 10 avoid certain parts of their communities.3

Knowing the Costs and Benefits
Knowing the costs of crime and the value of preventing or reducing crime helps the community and its leaders to get a firm grasp on the effect of crime throughout the jurisdiction. It is an especially useful way to help drive home the impact of emerging crimes, such as identity theft, and new concerns, such as effective programming for offender reentry into communities. It is also a way to build support for an effective program by showing that the program more than pays its own way. Several techniques are available to illustrate the ratio of costs to benefits.

  • Combine information on the costs of crimes in the neighborhood with data on the cost-effectiveness of crime prevention strategies.

  • Highlight strategies that can cost-effectively address specific crimes and causes of crime in the neighborhood. For instance, point out that with a 10 percent increase in the availability of high-quality early childhood education, ever dollar invested will save $7 that would otherwise need to be spent on future juvenile and adult criminal justice costs.

  • Point out the costs that are avoided because of effective prevention programming.

  • Use if-then statements: "If we prevent just two auto thefts, then the program will more than pay for itself." This would be correct if the program costs x, preventing two auto thefts is worth y, and y is greater than x.

Examples of crime's costs and prevention's effectiveness can also help build community support for prevention strategies. Local civic groups may become eager advocates when they realize that prevention strategies save dollars and strengthen communities.

Putting the Facts to Work in the Local Community
National data show the overall impact of crime and the benefits of prevention. But what's most important is how crime affects us in our neighborhoods. Until the local impact and costs are illustrated, the need for crime prevention will be considered as something required in the other neighborhood or the adjoining community, but not this community. A number of methods are available for developing the local facts.

  • Combine the national numbers on crime costs with data from the community. Investigate local budget costs for various aspects of crime's impact. This will ground the police chief's efforts in local, not just national, realities. For example, the news that the average loss due to burglaries in the community is $1,000 per crime and that the total loss last year was $597,000 from597 burglaries often makes a greater impact than national numbers that tell a similar story.

  • Look at the consumer price index (from the Bureau of Labor Statistics in the U.S. Department of Labor)and similar figures for industry to see whether the local region is more or less expensive than the national average. Research librarians, especially those at local colleges and universities, may be able to direct you to state-specific studies. These findings may require adjusting national cost estimates to the local situation.

  • Check with a local accounting or insurance firm. An actuary may be willing to provide figures relevant to the community on lost wages and productivity from death or disability caused by crime, based on the community's crime victimization rates and local wage structure. Ask your local hospital for the cost of a typical emergency room visit for an assault victim. Some basic multiplication can suggest the costs the community is already facing.

  • Talk with local school officials and with recreation and parks staff. What are some public costs of repairing vandalism damage and cleaning up graffiti? What school or after school activities went unfunded because of the costs of repairing crime damage?

  • Find out what information the business community has about the costs of crimes its members experience and how those costs are passed along to customers. Perhaps statistics are available through the chamber of commerce on losses to local businesses because of shoplifting.

  • Use the state's Uniform Crime Reports agency see (www.fbi.gov) and criminal justice statistical analysis center (see www.jrsa.org) to gather state-specific reports on crime costs that can help enrich the local picture and anchor national data.

Cost-Effective Crime Prevention Programs and Strategies
Selected examples are presented to illustrate how crime prevention strategies have more than paid for themselves. These strategies address a variety of prevention subjects, ranging from child abuse to juvenile crime, from fraud to gangs, and from drug abuse to auto theft.

Settling Disputes without Violence:
Mediation programs offer a relatively simple way for people to settle disputes out of court that could otherwise lead to violence. Programs vary in size and scope and take on a wide range of cases: disputes between neighborhood gangs, between landlords and tenants, between parents and children, between neighbors, and between employers and employees. Mediators have heard cases concerning assault and battery, child custody, trespassing, and property damage, to name just a few subjects.

An evaluation of the Durham, North Carolina, Dispute Settlement Center found that cases handled by the center cost an aver age of $72. Meanwhile, it costs $186 for the city, county, or state to process similar cases in court. The evaluator estimated that the dispute center had the potential to save the Durham justice system $71,726 a year based on the program's caseload at the time of the evaluation.4

Operation Safe Streets: Operation Safe Streets (OSS) in Phoenix, Arizona, worked to cut youth-related crime, gang violence, and gun carrying. Using additional police officers, OSS set goals to reduce gang violence by 5 percent over the summer, maximize the enforcement of federal and state weapons violations, and respond within five days to all citizens' complaints about gang activity. This project of the Phoenix Police Department succeeded because of cooperation between police and local residents: community members report suspicious activities and identify gang members to police, and police officers attend public meetings to report on police activities and build community support.

Running the program during the summer of 1998 cost police an extra $150,000 to cover overtime hours for more than 70 law enforcement officers. OSS reported 57 incidents of gang-related violence, down 33 percent from the 86 incidents reported in the summer of 1997.5

Prevention Saves: Stopping Auto Theft: The Michigan Automobile Theft Prevention Authority (ATPA) draws on the combined efforts of law enforcement, communities, and businesses to prevent auto thefts. ATPA awards grants to law enforcement agencies, prosecutors' offices, and nonprofit community organizations to run auto theft prevention programs and public awareness campaigns, investigate fraudulent insurance claims, and design projects to apprehend and prosecute auto thieves. ATPA grantees have carried out activities ranging from raiding commercial auto parts suppliers suspected of dealing in stolen auto parts to etching vehicle identification numbers on car windows.

Michigan residents fund ATPA by paying a dollar a year for each insured noncommercial vehicle owned. In 2004 law enforcement recovered 3,541 vehicles and arrested 2,439 people through the use of ATPA funds. The authority reports that for every dollar invested by ATPA, law enforcement grantees recovered $4.92. In nine years, ATPA funded teams stopped 5,321 insurance fraud cases, recovering $33.9 million.6

Operation Restore Trust: Operation Restore Trust focuses and coordinates antifraud efforts to reduce abuse and waste in Medicare and Medicaid. The initiative includes widespread antifraud and fraud-spotting education as well as development of sophisticated detection systems that take advantage of advanced computer capabilities and a series of management improvements. In a two-year demonstration phase in five states, Operation Restore Trust produced $23 in savings for every dollar in program costs. The program is now being implemented nationally.7

Statewide Addiction Treatment: The California Drug and Alcohol Treatment Assessment analyzed the results of treatment for 150,000 drug addicts. Treatment reduced illegal drug use by 40 percent, lowered drug-related illnesses as evidenced by a one-third drop in hospitalization rates, and reduced overall criminal activity by two-thirds. The study concluded that the greater the time spent in a treatment program, the greater the reduction in individual criminal activity.

Although treating the addicts cost $209 million, this program saved $7 for each dollar invested in it. Overall, drug treatment generated benefits of $1.5 billion, mostly from reduced crime.8

Drug-Free Small Businesses: The U.S. Small Business Administration reported that drug-free workplace programs conducted by small businesses generate substantial returns in employee productivity and reduced turnover. A drug-free workplace program costs $22 to $50 per employee compared with $640 in annual workforce costs by an untreated abuser.9

Community Trials Project: The Community Trials Project, conducted in California and South Carolina, seeks to reduce underage drinking and alcohol-involved injuries by limiting the access of youth to alcohol; increasing the efficiency and enforcement of driving-while-intoxicated laws; and mobilizing community support. The project also has the potential to reduce other risky social behaviors linked to drinking, including violence, suicide, and high-risk sexual activity.

An analysis of the program revealed a net reduction of 78 car crashes in the two states. Based on an estimated cost per crash of $40,000 for medical, legal, and insurance costs and for lost productivity, the program generated savings of $2 million even after accounting for $1.1 million in start-up costs. These savings reflect only costs associated with car crashes. Additional savings may have been generated from reductions of other problems not measured in this particular evaluation, such as reducing youth access to and use of alcohol.10

Alternative Sentencing: Prison overcrowding and the enormous costs associated with building and operating prisons led to the formation of the Office of Alternative Sentencing (OAS) in Connecticut in 1990. OAS places low-risk offenders in alternative programs, such as substance abuse treatment, vocational and educational assistance programs, counseling, and community service. Since 1990, more than 150,000 offenders have participated in OAS programs.

It costs $7,000 to supervise an offender through alternative sanctions, compared with $25,000 a year to incarcerate someone in Connecticut. The OAS evaluation estimates that without alternative sanctions, the state would have needed an additional 3,500 prison and jail beds at a capital cost of $525 million and operational costs of $94 million per year. This means that the alternative sentencing effort yielded $619 million in cost savings. In addition, participants have generated more than 250,000 community service hours, valued at more than $1.3 million.11

Hawaii's Healthy Start: Hawaii's Healthy Start program has helped reduce child abuse and neglect by providing at-home visits and other support services to at-risk families with newborns. The visits and other services continue for five years after the child's birth. Goals of the program include improving parenting skills and enhancing child health and development.

The price of one year in Healthy Start averages $2,800 per family. Compare that with a $25,000 price tag to the state family welfare system to investigate and provide related services for child abuse and neglect cases. One evaluation found that between 1987 and 1991 the program prevented 42 abuse and neglect cases, which saved more than one million in child protection services costs alone.11

Prevention: A Sound Investment
Preventing crime does, indeed, save money. In order to show that the programs work, record keeping and evaluation are essential. Explaining the cost-benefit ratio of a crime prevention effort can help build support in the community and in government for programs that work. ■

1 U.S. Department of Justice, National Institute of Justice, Victim Costs and Consequences: A New Look, by Ted R. Miller, Mark A. Cohen, and Brian Wiersema (Washington, D.C.: U.S. Government Printing Office, 1996, updated 2001), 19.
2 National Crime Prevention Council, Building Safe and Vital Communities (Washington, D.C.: n.d.).
3 National Crime Prevention Council, Are We Safe? The 2000 National Crime Prevention Survey (Washington, D.C.: 2001), 11-13.
4 U.S. Department of Justice, National Institute of Justice, Resolving Community Conflict: The Dispute Settlement Center of Durham, North Carolina, by Daniel McGillis (Washington, D.C.: U.S. Government Printing Office, 1998), 12, www.ncjrs.org/pdffiles/172203.pdf, May 24, 2006.
5 Federal Bureau of Investigation, Crime in the United States 1997
(Washington, D.C.: U.S. Government Printing Office, 1997), 29.
6 Michigan Automobile Theft Prevention Authority, 2004 Annual Report to the Governor and Legislature of the State of Michigan (East Lansing, Michigan: 2004), 5.
7 U.S. Department of Health and Human Services, Administration on Aging, "Fact Sheets: Senior Medicare Patrols," (www.aoa.gov/press/fact/alpha/fact_help_fight_pf.asp), May 24, 2006.
8 California Department of Alcohol and Drug Programs, Evaluating Recovery Services: The California Drug and Alcohol Treatment Assessment, by Dean R. Gerstein, Robert A. Johnson, Henrick Harwood, Douglas Fountain, Natalie Suter, and Kay Malloy (Sacramento, California: 1994), 4.
9 Drug Strategies Inc., Keeping Score 1995 (Washington, D.C.: 1995), 22.
10 Andrew J. Treno and Harold D. Holder, "Environmental Approaches to Reducing Underage Drinking," Juvenile Justice, vol. 5, no. 2 (1998): 24, (www.ncjrs.org/pdffiles/173425.pdf), May 24, 2006.
11 Patrick J. Coleman, Jeffrey Felten-Green, and Geroma Oliver, "Connecticut's Alternative Sanctions program," Practitioner Perspectives (October 1998): 9-10.
12 U.S. Department of Justice, National Institute of Justice, Helping to
Prevent Child Abuse and Future Criminal Consequences: Hawaii's Healthy Start, by Ralph B. Earle (Washington, D.C.: U.S. Government Printing Office, 1995), 2, 9.

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From The Police Chief, vol. 73, no. 7, July 2006. Copyright held by the International Association of Chiefs of Police, 515 North Washington Street, Alexandria, VA 22314 USA.








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