NCJ Number
85375
Date Published
1981
Length
21 pages
Annotation
Urban land use models are applied to link crime to property values and thus to the tax base and revenue-raising ability of the public sector that finances crime control.
Abstract
Criminal activity enters into business location models by increasing transfer costs. Firms facing relatively high levels of criminal activity will have production and transfer costs raised relative to those of companies in lower crime rate locations. Crime modifies the residential land use models in that it enters the individual's preference function for housing at a given point (or affects transportation costs). Thus, a high-crime area becomes less desirable, meaning less housing is demanded, or people move from the area, lowering property values. Using the residential land use model developed, an expression for the value of residential property at a particular location can be established. First, it is assumed that a typical household attempts to maximize utility, subject to a budget constraint. Based on the utility function and the budget constraint, a bid rent function, which includes crime, can be derived. The actual impact on residential property values, however, depends not only on household bid rents but also on the response of housing suppliers to bid rents. Thus, it is necessary to specify a housing supply function. Finally, the impact on residential property values is the combined effect of a decrease in bid rents and a resulting decline in density. The application of the model suggests that by reducing crime rates, the city can increase property values and thus property tax revenues. Additional applications of land use models are also discussed, and the appendixes examine the transfer cost model, the competitive firms model, and principal components analysis of the housing and socioeconomic variables. Mathematical equations, tabular data, and 29 references are provided.