Media Briefings

Cutting Crime Through Private Security: Evidence From Los Angeles

  • Published Date: May 2011

Private security can be a highly cost-effective way of cutting crime, according to a study of the impact of ‘business improvement districts’ (BIDs) created in Los Angeles in the 1990s. The research by Professors Philip Cook and John MacDonald, published in the May 2011 issue of the Economic Journal, finds that every $1,000 spent by the average BID generated $20,000 worth of crime reduction – a remarkable 20-to-1 ratio.

What’s more, the city of Los Angeles itself saved money on policing because the arrest rate decreased in BIDs, and there was no evidence of crime displacement to neighbouring areas. The researchers conclude that what has worked in Los Angeles could work in high-crime commercial districts of other cities around the world.

Policy debates about criminal justice typically focus on how best to use public resources to reduce crime through deterrence, incapacitation and rehabilitation of criminals. Such a formulation of the policy problem ignores the role of private action.

The crime rate is not determined solely by the population of active criminals. Individuals choose whether to commit crime and what crimes to commit based in part on the characteristics of available opportunities. And those opportunities have evolved to a large extent as a result of changes in the private sector.

Among the relevant trends are the growing sophistication of alarms, monitoring equipment and locks; the decline in the use of cash; and the growing employment of private security, including in the context of BIDs.

A BID is a non-profit organisation created by commercial property owners that provides local public goods, usually including public safety. By hiring private security and working closely with the police, BIDs ‘co-produce’ crime control.

This research investigates the crime-prevention performance of 30 BIDs that were created in Los Angeles during the 1990s. The statistical evaluation demonstrates that BIDs reduce crime – that is, that crime rates in BIDs are lower than what they otherwise would have been, as indicated by crime trends in non-BID areas of the city.

Furthermore, there is a clear connection between the ‘dose’ (the amount of BID spending on private security) and the ‘response’ (crime reduction). Every $1,000 spent in a BID neighbourhood generates $20,000 of social benefit in the form of crime reduction – a remarkable 20-to-1 benefit-cost ratio.

The city of Los Angeles also saves money because the arrest rate decreases in BIDs. And there is no evidence of crime displacement to neighbouring areas. Thus, the social cost savings from BID security expenditures is an order of magnitude greater than expenditures.

It appears very much in the interest of Los Angeles to continue providing organisational support for its BIDs. On the other hand, the analysis does not imply that other neighbourhoods in Los Angeles should organise since it is reasonable to suppose that those areas with the highest potential payoff have already organised.

The researchers have greater confidence that what has worked in Los Angeles will probably also work in certain high-crime commercial districts of other cities around the world. What is required to solve the collective action problem in organising a BID is the legal and public administrative framework of the sort currently provided by California and Los Angeles in particular.

ENDS

Notes for editors: ‘Public Safety through Private Action: An Economic Assessment of BIDs’ by Philip Cook and John MacDonald is published in the May 2011 issue of the Economic Journal.

Philip Cook is at Duke University. John MacDonald is at the University of Pennsylvania.

For further information: contact Philip Cook on +1-919-613-7360 (email: pcook@duke.edu); or Romesh Vaitilingam on +44-7768-661095 (email: romesh@vaitilingam.com).