I’ve been doing some data exploration on public sector spending and societal outcomes and have some preliminary results that have caused me to puzzle about what they might mean. I’ve been looking at annual data for OECD countries (33 countries) over the period 2000 to 2010 and the relationship between public sector size and crime rates. Public sector size is defined as total government expenditure as a share of GDP. The crime variables were the number of homicides per 100,000 of population and the number of burglaries per 100,000 of population. The data is from the OECD and is essentially unbalanced panel data. The results for homicides did not surprise me but that for burglaries did.
In Figure 1, I plot a LOWESS smooth (0.8 bandwidth for both
figures) of the relationship between the government expenditure to GDP ratio and
the homicide rate. In Figure 2 it
is the relationship between the government expenditure to GDP ratio and the burglary rate. The smoothed relationships do not control for
any other variables including time but then it is also not a very long time period. Figure 1 (data
for the years 2000 to 2010) shows that as public sector size increases, the
homicide rate first drops sharply and then levels off. This does not seem an unreasonable
relationship to me. As public
sector size grows, societal infrastructure in health, education and spending on
law enforcement is put in place that essentially improves life and opportunity
and can result in a less violent society.
Most of the gains seem to occur as public sector size grows to about 40
percent of GDP and then after that there seem to be no further declines in
homicide rates as public sector size increases.
Figure 2 (data for the years 2003 to 2010) is more puzzling. As public sector size increases, burglaries per 100,000 of population actually rise. Again, I’m not controlling for any other variables but why would a larger public sector be accompanied by more property crime? The average annual burglary rate over this period ranges from a low of 29.2 burglaries per 100,000 of population for South Korea (average G/GDP ratio of 27.4%) to a high of 1,625 burglaries per 100,000 of population for Denmark (average G/GDP of 54.3%). As an additional note, Canada’s burglary rate averaged 733 per 100,000 of population with a G/GDP ratio of 41.1%. Could this be a function of general resources devoted to crime reporting? Is it a function of how these property crimes are reported in different jurisdictions? I've found a few articles dealing with the determinants of residential burglaries with explanatory variables like population density, severity of punishments, gains from the crime, etc... I found a working paper on the econometric analysis of burglaries in Ireland that finds a larger population share of young males correlated with more burglaries and higher aggregate consumption spending associated with fewer crimes. However, I have not come across anything relating crime to general levels of public sector size or spending. Is anyone aware of any other literature in this area that might help provide an explanation?