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The Cost of Crime and Violence in Five Latin American Countries

Abstract

This paper provides evidence on the costs imposed by crime and violence in five Latin American countries: Chile, Costa Rica, Honduras, Paraguay and Uruguay. Crime and violence stand out as one of the major social challenges to be dealt with in Latin America. However, the incidence of crime (and thus its social and economic impact) varies among countries. Based on a common theoretical framework across all five countries, we use a costs-accounting methodology and find that the cost of criminality varies from a striking 10.5 % of GDP in Honduras to a moderate 2.5 % in Costa Rica. Also, by quantifying the different components of the cost equation separately, we provide insight on which felonies are more costly and which agents are burdened most heavily by these costs.

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Notes

  1. According to Latinobarometro (2013) in 12 of the 18 LATAM countries covered by their polls the main problem of the country in 2013 was criminality.

  2. Given that this analysis was carried out in the context of an Inter-American Development Bank’s research project, the choice of the sample of countries was made in agreement with the IDB. The main criteria for choosing these countries were: i. the need of generating this kind of estimations for the first time for most of these countries, ii. the availability of relatively comparable information for these countries and, iii. the fact that they are all relatively small countries.

  3. The main features of the ES and other surveys employed in the analysis are discussed in section B of the Appendix.

  4. It is important to note that this estimation is a lower bound that will be likely underestimating the total private cost that households face, because in addition to the expenditures on hiring security services they also incur in other expenditures, such as barbed wire, electrical fence, etc. that are not necessarily provided by security firms. Unfortunately we do not have information to estimate the security costs of goods or services that are not provided by security companies.

  5. It is worth noting that corruption measurements based on individuals’ perceptions may be an unreliable approach, given that they imply taking a stand on a sensitive issue (see Kenny 2009).

  6. For instance, Alam (1990) shows that bribery has a negative impact on allocative efficiency.

  7. The main difference between the QALY and the DALY approach is stated by Gold et al. (2002) as follows: “while the first are a measure of life expectancy (a good to be maximized), the latter are a measure of the gap that distances a person from full health (a bad to be minimized)”.

  8. Emotional damage imposed on the victim’s family may be an important consequence of homicides and injuries which is not directly considered in the quantification analysis.

  9. Around 50 % in Uruguay, according to data from the victimisation survey.

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Acknowledgments

Comments and suggestions by Gustavo Beliz, Rodrigo Soares, Daniel Mejia, Ana Corbacho and participants at the first and second discussion workshop of the Inter-American Development Bank’s “The Cost of Crime and Violence in Latin America and the Caribbean” research project are gratefully acknowledged. This research was possible thanks to the financial support of the IDB and the United Nations Development Programme. We are deeply indebted with the following researchers that contributed to the different national studies: Catalina Araya, Alejandra Bazzano, Jorge Campanella, Rodrigo Leyton, Catalina Mertz, Adriana Moya, Nicolás Muños, Mauricio Olavarria, José Rodríguez, Francisco Torres and Víctor Vázquez. The usual disclaimer applies.

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Correspondence to Diego Aboal.

Appendix

Appendix

Intermediate Estimations

In this section, we provide some examples of the intermediate results achieved when quantifying the different cost categories, so as to clarify how the methodology is applied. Additional information can be found in Author's own estimations.

Table 12 Private expenditure in crime prevention and punishment: Uruguay
Table 13 Public expenditure in crime prevention and punishment: Uruguay
Table 14 Costs of homicides and injuries: Uruguay
Table 15 Value of stolen property: Uruguay
Table 16 Opportunity costs due to reclusion: Uruguay

Surveys Employed in the Estimations

The Enterprise Survey (World Bank)

This survey is carried out by the World Bank. Based on stratified random sampling, it collects information from formal and private companies on business climate and various associated matters. The ES has been implemented in 135 countries on five continents, in many cases for several years. It surveys owners and senior managers of companies. Sample sizes vary depending on the country.

National Urban Survey of Public Safety-Chile (Interior Ministry)

This is a survey with a probabilistic sampling with three-stage clustering, administered by the National Institute of Statistics of Chile, applied face to face, to people over 15 years old. In 2010, the survey was applied to 25,933 people, representing 11,593,139 inhabitants. Apart from providing information about general victimisation of households the survey provides data on the following crimes: burglary in the house, robbery by surprise on people, robbery with individual violence, theft, injury, theft of vehicles and theft from vehicles.

Victimisation Survey-Costa Rica (Demoscopia)

The survey applied stratified random sampling, with multistage selection, distributed proportionally to the population size of the regions of the country, with a maximum error of ± 2.8 % and a confidence range of 95 %. The sample included 1200 households representative of 1,266,418 households and 2,327,400 people in the Costa Rican population.

Victimisation survey-Honduras (Demoscopia)

This survey applied stratified random sampling, with multistage selection, proportionally distributed in 16 departments and their respective municipalities. The sample size is 1111 households. The maximum sampling error is 2.99 %, with a confidence range of 95 %.

National Victimisation Survey-Paraguay (General Directorate of Statistics, Surveys and Censuses)

The methodology used was based on the International Victimization Survey of the United Nations Interregional Crime and Justice Research Institute (UNICRI) and the United Nations Office on Drugs and Crime (UNODC) and was conducted under an interagency cooperation agreement between the Ministry of Interior, the Secretariat of Women’s Affairs of the Office of the President, the UNDP, the United Nations Fund for the Development of Women and the Spanish Agency for International Cooperation for Development, besides the General Directorate of Statistics, Surveys and Censuses. The sample is obtained by random selection of households, whereas answers are provided by any member of the household over 15 years old. The survey, whose sample size is 3500 households, is representative of the 15 departments and of both rural and urban areas.

Victimisation Survey-Uruguay (Interior Ministry)

The universe is defined as all persons aged 17 years living in towns with more than 1000 inhabitants. A multistage probability sample of 1700 cases was used, stratified by geographical area. A random sample of these characteristics has a maximum error margin of +/− 2.4 % within a confidence range of 95 %.

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Aboal, D., Lanzilotta, B., Dominguez, M. et al. The Cost of Crime and Violence in Five Latin American Countries. Eur J Crim Policy Res 22, 689–711 (2016). https://doi.org/10.1007/s10610-015-9295-5

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Keywords

  • Costs
  • Crime and violence
  • Development
  • Latin America