Carrots, Sticks and Broken Windows

This paper investigates the impact of economics conditions (carrots) and sanctions (sticks) on murder, assault, robbery, burglary and motor vehicle theft in New York City, using monthly time-series data spanning 1974-1999. Carrots are measured by the unemployment rate and the real minimum wage; sticks are measured by felony arrests, police force and New York City residents in prison. In addition, the paper tests the validity of the 'broken windows' hypothesis, where misdemeanor arrests are used as a measure of broken windows policing. The broken windows hypothesis has validity in case of robbery and motor vehicle theft. The models explain between 33 and 86 percent of the observed decline in these crimes between 1990 and 1999. While both economic and deterrence variables are important in explaining the decline in crime, the contribution of deterrence measures is larger than those of economic variables.