tiểu luận kinh tế lượng factors affecting criminal rate in countries between 2007 and 2016

ABSTRACTThe report aims to illustrate the influence of population, GDP growth rate, unemployment rate and HDI on criminal rate, and to give a solution to reduce criminal rate base on the

FOREIGN TRADE UNIVERSITY FACULTY OF INTERNATIONAL ECONOMICS

-ECONOMETRICS REPORT

Factors affecting criminal rate in

countries between 2007 and 2016

Class: KTEE218.1

GROUP 8

Tao Thị Ha My 1814450055 Anh 02 CLC KTQT Nguyen Thi Thuy Duong 1814450023 Anh 01 CLC KTQT

Vu Doan Hai Anh 1814450015 Anh 01 CLC KTQT Mai Thanh Phuong 1814450063 Anh 02 CLC KTQT Pham Thanh Hai 1814450034 Anh 02 CLC KTQT

Hà Nội, tháng 9 năm 2019

1

MỤC LỤC

ABSTRACT 3

INTRODUCTION 3

I) SECTION 1: Overview 4

I.1) Theoretical framework 4

I.1.1) Definition of crime and crime rate 4

I.1.2) Overview of crime cases over the world during 2007-2016 4

I.1.3) Factors affecting crime rate 6

I.2) Literature review 7

I.2.1) Previous methods of crime statistics: 7

I.2.2) Related published reseaches: 8

I.2.3) Recent Vietnam studies about crime: 9

I.2.4) The aim of our team research: 10

I.2.5) Differences in our research: 10

II) SECTION 2: MODEL SPECIFICATION 11

II.1) Methodology 11

II.1.1) Methods 11

II.1.2) Theoritical model specification: 11

II.2) Descriptive Statistics and Data Description 12

II.2.1) Descriptive Statistics 12

II.2.2) Data Description: 13

II.3) Correlation between variables 14

III) SECTION 3: ESTIMATED MODEL AND STATISTICAL INFERENCE 15

III.1) Estimation model 15

III.1.1) Estimate result 15

III.1.2) Sample regression model 16

III.1.3) Result analysis 16

III.1.4) Meanings of estimated coefficients 16

III.2) Hypothesis testing 17

III.3) Resolution and Recomendation 19

III.4) Limits of report 20

IV) CONCLUSION 20

V) APPENDIX 22

VI) REFERENCES 27

ABSTRACTThe report aims to illustrate the influence of population, GDP growth rate, unemployment rate and HDI on criminal rate, and to give a solution to reduce criminal rate base on the result of the model.

INTRODUCTION

Crimes are always one of the most persistent problem with whom each nation must face

In consequences, many methods have been applied to reduce criminal rate like increasing the number of policeman, or developing people’s education and awareness, e.t.c However, our group is always curious about the factors affecting criminal rate, about the impact of the countries’ macroeconomics index such as GDP or Unemployment rate on crimes We are always wondering what drives people to such extreme As a result, our group choose the topic “Factors affecting criminal rate in countries from 2007 to 2016” to satisfy our curiosity.

After analyzing the data of 10 countries over the years, specifically from

2007 to 2016, by the linear regression model using OLS method, our group has finally found the correlation between population, GDP growth rate,

unemployment rate, HDI and criminal rate Our report consists of 4 section: I.Section 1: Overview of the topic

II.Section 2: Model specification

III.Section 3: Estimation model and Statistical references

IV.Section 4: Recommendation and Resolution

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I) Section 1: Overview

I.1) Theoretical framework

I.1.1) Definition of crime and crime rate

Whether a given act or omission constitutes a crime does not depend on the nature of that act or omission It depends on the nature of the legal consequences that may follow it

An act or omission is a crime if it is capable of being followed by what are called criminal proceedings Different countries define crime differently In England, the definition of "crime" was provided by the Prevention of Crimes Act 1871, and applied for the purposes of section

10 of the Prevention of Crime Act 1908:

“The expression "crime" means, in England and Ireland, any felony

or the offence of uttering false or counterfeit coin, or of possessing

counterfeit gold or silver coin, or the offence of obtaining goods or

money by false pretences, or the offence of conspiracy to defraud, or any misdemeanour under the fifty-eighth section of the Larceny Act, 1861.”

In ordinary language, a crime is an unlawful act punishable by a state or other authority The term "crime" does not, in modern criminal law, have any simple and universally accepted definition, though statutory definitions have been provided for certain purposes The most popular view is that crime is a category created by law; in other words, something is a crime if declared as such by the relevant and applicable law One proposed definition is that a crime or offence (or criminal offence) is an act harmful not only to some individual but also to a

community, society, or the state ("a public wrong") Such acts are forbidden and punishable

by law Usually, to be classified as a crime, the "act of doing something criminal" must – with certain exceptions – be accompanied by the "intention to do something criminal" While every crime violates the law, not every violation of the law counts as a crime Breaches

of private law (torts and breaches of contract) are not automatically

punished by the state, but can be enforced through civil procedure.

Crime rate is a count of crimes complied to assess the effectiveness of a crime control policy, and the impact of the policy on the risk of crime victimization For example, burglaries/total population is the standard "crime rate" reported by the FBI and used by social scientists Crime rates differ widely across different times and different places, for a variety of reasons that are studied by social scientists Violent crime rates may define perceptions regarding community safety.

I.1.2) Overview of crime cases over the world during 2007-2016

Crime definitions differ between the countries because of different penal codes, and dissimilar reporting behaviour and recording practices; consequently the differences of crime levels in different countries may be based on different definitions, reporting behavior and

recording practices rather than differences in actual crime Therefore trend analysis is a more fruitful approach as it shows how crime has developed Crime cases over the world were

insufficiently recorded However, the cases can be indicated by some

representative countries and regions.

In America, crime cases had a downward trend in most of the time surveyed, from

2007 to 2014 However, in two years end of the period, the cases increased sharply.

Figure 1: Crime offense figure in America from 2007 to 2016

- Source: FBI’s Uniform Crime Reporting (UCR) Program

In 2011, an estimated 1,203,564 violent crimes occurred nationwide, a decrease of 3.8 percent from the 2010 estimate.

When considering 5- and 10-year trends, the 2011 estimated violent crime total was 15.4 percent below the 2007 level and 15.5 percent below the 2002 level.

There were an estimated 386.3 violent crimes per 100,000 inhabitants in 2011 Aggravated assaults accounted for the highest number of violent crimes reported to law enforcement at 62.4 percent Robbery comprised 29.4 percent of violent crimes, forcible rape accounted for 6.9 percent, and murder accounted for 1.2 percent of estimated violent crimes in 2011.

In the European Union, The crime statistics presented in this article cover offences

recorded by police in EU Member States and some other European countries These data do not purport to describe all crime in Europe: some crime goes unreported and changes in rates

of particular offences may be affected by new policing strategies or methodological changes National data have been aggregated to provide estimates for the EU as a whole for the purpose

of identifying overall trends Any inferences for the EU or Member States should be based on trends over time There was a general tendency for levels of recorded crime to decrease in recent years: the number of most types of crimes recorded by the police in the EU-28 fell between 2007 and 2012 as can be seen from Figure 2.

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Figure 2: Crimes recorded by the police, 2002–2012

- Source: EurostatI.1.3) Factors affecting crime rate

There are certain social and economic characteristics that affect the formation of crime rates, either positively or negatively researchers have identified a number of factors that

influence crime rates and typically are present in jurisdictions where crime rates are high.

Poverty and socio-economic conditions

Statistically, poverty goes hand-in-hand with crime Where poverty is

prevalent in a community, that community will experience higher levels of crime Generally, it's not the poverty itself that leads to higher crime rates but the factors associated with poverty, such as chronic joblessness, less access to quality

schools, employment, role models and the real or perceived lack of opportunity.

Social Level of Morality

People's upbringing and social environment can shape their view of the world and directly affect their decisions in the future For example, research shows that people who have been physically, sexually or emotionally abused as children are three times more likely than

non-abused adults to commit acts of violence In communities where crime

is tolerated, a person may commit a crime simply to fit in with his peers.

Police Policy

A well-resourced police force coupled with tough sentences for perpetrators may help

to reduce the crime rate For example, the U.S crime rate was much higher in the 1960s and 1970s, before lawmakers responded by enacting tough-on-crime policies and building

prisons Mass incarceration removes people from the streets who would otherwise be

committing crimes Visible policing may also have a deterrent effect When New York Mayor Rudy Giuliani implemented a policy of "broken-windows policing" – cracking down on minor crimes to make neighborhoods feel safer – crime declined at a precipitous rate Some argue against credit given to Giuliani's policies, suggesting that a drop in unemployment rates may have been the reason for the crime reduction.

Age of the Population

There's a correlation between the crime rate and the age of the population Specifically, most crimes are committed by people in their teens, 20s and 30s, especially in areas where the population is both young and transient.

Apart from these factors, there are other elements affecting crime

rate, which will be clarified by this report.

I.2) Literature review

Crime rate differ from different time and different place, for a variety of reasons that are studied by social scientists There have been many methods established aiming at measuring crime rate in a country However, each one has their benefits and also drawbacks.

Public surveys are occasionally conducted to the amount of crime which are not reported to the police, which is much more reliable than assessing trends But they also have their limitations while reporting such as ignorance of offences

against children, not useful enough information for the local crime prevention and also uncounting number of offenders before the criminal justice system.

I.2.1) Previous methods of crime statistics:

The major methods for collecting crime data is law enforcement reports, which only reflect crimes which are collected, reported, recorded and not

subsequently cancelled as well as victim study (victimization statistical surveys, relying on individual’s memory and honesty) Laws and practices vary between jurisdictions, therefore comparing crime statistics can be difficult.

Some countries have established a new method to measure almost absolute result in crime rate statistics, especially the USA.

In the USA, there are two major data collection programs.

First, the Uniform Crime Reports, which is considered most reliable, was established in the early 1930s It is administered by Federal Bureau of Investigation, complies data of the crimes reported to local police Because the data is based on local information, the URC permits statistical analysis for local areas.

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The accuracy of the UCR varies whether people are likely to report crimes to the

report.

However, depending on types of crime, it has different accuracy rate Long – term analyses of UCR data is still questionable because computer storage is better than police keeping in the past 20 years Still, the UCR is the standard and most widely used in measuring crime in the USA.

Secondly, US Census Bureau administered the National Crime Victimization Survey, which begun in 1973 This measured is a representative telephone sampling of 40,000 households to determine how many people was the victim by one of the seven crime in last year such as rape, robbery, assault, personal theft, household theft, burglary and motor vehicles theft, but not

murder rate because the victims cannot be surveyed The NCVS was a national survey so it

cannot break down by state or locality Most criminologists consider the NCVS more accurate than the UCR because people can acknowledge that they have been victim of a crime to an

anonymous survey, even they did not report the crimes to the police.

In International Encyclopedia of the Social & Behavioral Sciences of Martin A Andersen, it

is stated that to measure crime rate, we have to considered two necessary pieces of data: crime data and population at risked data (which is denoted in the equation

∗ ) This count is most often based on Uniform Crimes Report mentioned above However, it also meets some limitations:

Crime reporting can be varied from different police

detachment Not all criminal events are reported to police

Lack of population at risk of crimes data In spatial criminology, the most common source of population at risk data is the census – resident

population, but it also varies in different regions.

Some contributions have theoretically tried to establish a relationship between crime, growth and development (e.g., Bourguignon, 2000, 2001; Fajnzylber et al., 2002a, Mauro and Carmeci 2007) and some studies quantify economic and social cost of crime for different countries [Australia (Mayhew 2003), France (Palle and Godefroy 2000), the United Kingdom (Brand and Price 2000), New Zealand (Roper and Thompson 2006), the United States (Miller et

al 1996), Italy (Detotto and Pulina 2012), for some Latin America States (United Nations 2007) and Colombia (Cotte Poveda 2012)] The econometric results show that crime leads to a negative effect on real per capita output and employment For example, Peri (2004) using panel data of Italian provinces for 1951-1999 observes crime has a statistically significant negative effect on economic output and employment, indicating the possibility of

nonlinearities in the crime-growth relationship In particular, while she finds a statistically significant adverse violent-crime effect on growth, the impact of property crime is weak and

in some specifications perverse A World Bank study 5 (World Bank, 2006), using a sample of

43 countries for the period of 1975-2000, shows a strong negative relationship between crime and growth even after controlling for human-capital accumulation and income inequality Similarly, Càrdenas (2007) finds a significantly negative association between

crime and per-capita output growth in a panel of 65 countries using homicides data for

1971-1999 Time-series studies (e.g., Dettoto and Pulina 2009, Dettoto and Otranto 2010) using single country data also find a negative association between crime and income levels

However, Chatterjee and Ray (2009) based on a large cross-country sample for the period 1991-2005 and controlling for human capital and institutional quality, find no strong evidence

of a uniformly negative association between crime and growth Burnham et al (2004) using

US county level data are not able to establish a clear connection between central city crime and per capita income growth.

In 2014, Colin Webster and Sarah Kingston from Leads Metropolitans University, have gathered and reviewed 173 of the most cited articles and important monographs published mostly between 1980 and 2013 that either directly or indirectly tested the poverty and crime link in the United State, United Kingdom and Europe It is concluded that there is no direct relationship between unemployment rate and crime For example, in the findings of the effects

of family disruption resulted from jobless has an important impact on crime (Sampson, 1987)

In one of a series of important founding studies of the relationship between unemployment rate and crime rat, Cantor and Land (1985) using time series data for the United States, from

1946 to 1982, found a small but significant influence of the unemployment rate on property crime A similarly influential study by Chiricos (1987) reviewing data from when

unemployment rose dramatically in the 1970s, concluded that indeed total unemployment and the rate of increase of unemployment have strong influences increasing property crimes.

In 2016, a group of student in University of Kebangsaan Malaysia conducted a research about the relationship between economic growth and crime rate in the period from 1980 to

2013 while they examine in the long – run and short – run relationship The conclusion was that in the long – run as well as short – run relationship, the impact of economic growth toward criminal rate was considered to be positive and statistically significant, against the economist arguments when good economies tends to create more crime and the opposite occurs during bad economies.

In 2017, an MPRA (Munich Personal RePEC Archive) research, the authors (students of Goa Institute Management in India), include 13 factors: poverty level, literacy rate, net

enrollment ratio, per capital ratio (upper primary level), per capital schools, rural population, sex ratio, household availing bank services, population density, per capita GSDP (constant price), capita income (constant price), no of jails and minority population) The conclusion showed the analysis reflects a fairly strong relationship between population density, sex ratio and literacy rate and per capita crime under IPC in India and these factors play an utmost important role in determining the crime rate Factors like Per capita gross state domestic product and per capita schools form a relationship with per capita crime but don't effect it by

a large margin Rural population share and minority population play a very negligible role in determining the criminal cases registered in India.

I.2.3) Recent Vietnam studies about crime:

In Vietnam, there is a report about criminal rate of the country from

1986 to 2008, dividing in two periods and differs from different types of

crimes based on the data collected by Supreme People’s Court of Vietnam.

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To clarify the trend of crime situation, they use the three – year period to examine and the results showed that the level of crime rate in Vietnam from the period of 1986 – 2008 tend to increase in 3 different levels and two dramatically increasing periods:

First level, measured from 1986 to 1994, the crime rate increased

from 1,93% to 15,86%

Second level, including two periods: 1995 – 1997 and 1998 – 2000, the maximum increasing level was 25,71%

Third level, from 2001 to 2008, the crime rate increased from 8,54% to 18,52%

Two extreme changes in crime rate were in 1995- 1997, extreme

increase (64.85%) and 2001 – 2003, extreme decrease (6,34%).

Nowadays, crime situation is much more complicated than ever before, there are more people commit to crime, more criminal behaviors, more variable types of crimes, and also the intention to commit crime also differ from benefit or accidentally caused.

Although there have been several reports about criminal rate in Vietnam, the government still do not acknowledge about the reasons as well as the consequences and impacts of the density of population, GDP growth of the country, the

unemployment rate and also HDI of the citizens on the growth of criminal rate.

Therefore, our team choose the topic of “Factors affecting criminal rate

in countries from 2007 to 2016” Though the method of using econometrics model, our team will give remarks and forecast about components affecting

on crime rate in 10 countries during period 2007 – 2016

I.2.4) The aim of our team research:

The general objectives of our topic is to identify and analyze the impacts of the four factors on the criminal rate of ten countries across the world.

Systematize theoretical framework and empirical research about the

elements affecting crime rate.

Estimate regression model and analyze impact of variables on crime rate.

Recommend about decreasing crime rate due to changing policy in the four factors.

I.2.5) Differences in our research:

Firstly, our research collect data of GDP growth rate, population, HDI and also

unemployment rate of ten representative countries all over the world to identify the overall view of impacts of these four factors affecting crime rate in the period of 2007 – 2016.

Secondly, we use these factors because it is commonly more socialized than just number statistical and reports of cases Therefore, it is easier to give recommendations of each fields to the government and local authority.

II) SECTION 2: OVERVIEW

II.1.2) Theoritical model specification:

In this research, we choose 5 social variables to collect and analyze in this model:

Criminal rate (CRIMINAL RATE): is the rate of numbers of offences devided by total population (unit: %)

Population (POPULATION): is the population of a country in a year (unit: people)

GDP growth rate (GGR): is the change in norminal GDP (unit: %).

Human Development Index (HDI): a statistic composite index of life expectancy, education, and per capita income indicators, which are used to rank countries into four tiers of human development (no unit) Unemployment rate (UNEMPLOYMENT): the share of the labor force that is jobless (unit: %)

In this regression model, CRIMINAL RATE is the dependent variable and POPULATION, GGR, HDI and UNEMPLOYMENT is independent variables Our linear model:

CRIMINAL RATE = β 0 + β 1 POPULATION + β 2 GGR + β 3 HDI + β 4 UNEMPLOYMENT + U i

In which:

β 0 : the coefficient that shows how criminal rate is when it is not

depended others variables.

β 1 : the coefficient that shows how criminal rate depends on population.

β 2 : the coefficient that shows how criminal rate depends on GDP growth rate.

β 3 : the coefficient that shows how criminal rate depends on human developmne index.

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β 4 : the coefficient that shows how criminal rate depends on unemployment rate.

U i : is the error term, factors affects criminal rate but are not included in this model.

In theory and practical experience, when the standard of living increase, the criminal rate decrease It means that HDI and the criminal rate has a negative relationship It’s same to the relationship between the population and the criminal rate as well as the relationship between the GDP growth rate and the criminal rate Therefore, β 1, β 2, β 3 should be negative number.

In contrast, the unemployment increases usually leads to an increase in the criminal rate So that, β 4 should be a positive number.

II.2) Descriptive Statistics and Data Description

II.2.1) Descriptive Statistics

Sum criminalrate population gdpgrowthrate hdi uneploymentrate

II.2.2) Data Description:

(1) POPULATION (Population of countries from 2007 to 2016)

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