The economic consequences of crime in Italy

Journal of Economic Studies (2015), forthcoming (with O.Carboni)

This paper employs provincial data to study the relationship between several crime typologies, namely murder, robbery, extortion and fraud, and economic output in Italy. We employ a spatial econometric approach where the spatial proximity is defined by a measure of physical distance between locations, in order to take into account possible spill-over effects. The results of the spatial estimation suggest that criminal activities, namely murder and robbery, exhibit a negative impact on Italian gross domestic product while fraud and total crime do not affect economic output and that there are beneficial spill-overs from neighbouring provinces.    

The bi-directional relationship between gambling and addictive substances

International Gambling Studies (2015), forthcoming (with A.Bussu)

This study aims to analyse the co-occurrence of gambling activity and the consumption of addictive substance, such as tobacco, alcohol and drugs. By using a sample of 709 gamblers in Sardinia (Italy), a multivariate probit approach is proposed since it allows to study simultaneously the extent of correlation between the consumption of different substances.
Our findings document that on the one hand betting more money leads to an increase in the propensity to consume tobacco in the middle of the game, and on the other hand the simultaneous co-occurrence of smoking, alcohol and drugs drives up the probability to get more involved in gambling activity. Knowing the positive reinforcing effects of addictive substances is the first step in order to implement the most effective prevention and treatment modalities for problem/pathological gamblers.

Evidence of Marginal Deterrence: Kidnapping and Murder in Italy

International Review of Law & Economics (2015), vol. 41, pp. 63-67 (with B.McCannon and M.Vannini)

Empirical evidence of the marginal deterrent effect is provided. Exploring a data set of kidnapping crimes in Sardinia between 1960 and 2012 changes in Italian policy regarding sanctions for kidnapping and their associated impact on murders is considered. Deaths associated with kidnappings increase in prevalence when the kidnapping sanction increased, causing a decrease the marginal sanction for murder. Death rates reversed when enhanced sanctions for murder were later introduced.

Understanding ransom kidnappings and their duration

The B.E. Journal of Economic Analysis and Policy (2015), vol 14 (3), pp. 849-871 (with B.McCannon and M.Vannini)

Abstract: What factors drive the length of a kidnapping experience? A theoretical model is developed to conduct comparative statics. A unique data set covering all kidnappings for ransom in Sardinia between 1960 and 2010 is analyzed. Factors related to the ability to pay and cost of abduction matter. The effect of policies aimed at deterring the crime have mixed effects on its duration.

Assessing the productivity of the Italian hospitality sector: a post-WDEA pooled-truncated and spatial analysis

Journal of Productivity Analysis (2014), vol. 42 (2), pp. 103-121  (with M. Pulina and J.G. Brida)

Abstract: This paper analyses the productivity of the hospitality sector (hotel and restaurants) in Italy at a regional level by using a mix of non-parametric and parametric approaches. A novel pooled-truncated and spatial analysis is employed, based upon a window data envelopment analysis (WDEA), where pure technical efficiency is computed. The WDEA results show that Lombardy is the best relative performer. However, overall Italian regions reveal important sources of inefficiency mostly related to their inputs. As a post-WDEA, the pooled-truncated estimation indicates that the rate of utilisation and regional intrinsic features positively affect hospitality efficiency. Nevertheless, the spatial analysis does not support evidence of spill-over effects amongst Italian regions.

Crime as tourism externality

Regional Studies (2014), vol. 48 (4), pp. 693-709  (with B.Biagi)

Abstract: This paper analyses the linkage between tourism and crime with particular focus on the distortions generated onto criminal activities by the presence of visitors. Controlling for socio-demographic and economic variables, we empirically investigate the contribution of tourist arrivals to different types of crimes for 103 Italian provinces and for the year 2005. Possible spill-over effects of crime are taken into account by testing two spatial models (one spatial lag model and one spatial error model). We also test the hypothesis according to which the different geography of tourist destinations - i.e. urban, mountain, marine etc- alters the impact of tourism on crime. Finally, we measure the social cost of crime associated with tourist arrivals. 

Assessing substitution and complementary effects amongst crime typologies

European Journal on Criminal Policy and Research (2013), vol. 36 81), pp. 183-207 (with M.Pulina)

Abstract: This paper aims at assessing how offenders allocate their effort amongst several types of crime. Specifically, complementary and substitution effects are investigated amongst the number of recorded homicides, robberies, extortions and kidnapping, receiving stolen goods, falsity and drug related crimes. Furthermore, the extent to which crime is detrimental for economic growth is also tested. The case study is Italy and the time span under analysis is from 1981:1 up to 2004:4. A Vector Error Correction Mechanism (VECM) is employed after having assessed the integration and cointegration status of the variables under investigation. Empirical findings show that, in the long run, an increase in the overall welfare has a negative impact on the most serious crimes. In addition, the long run elasticities reveal symmetric results in terms of positive and negative relationships amongst types of crime. In the short run, the cross-deterrence elasticities highlight a complementary effect between more serious crimes (i.e. robberies, extortions and kidnapping) and milder crimes (i.e. drug related crimes and falsity), while a substitution effect amongst all other type offences. Policy implications are drawn.

Social conformity and suicide

Journal of Socio-Economics (2013), Volume 42, pp. 67-78 (with A.Bussu and V.Sterzi)

Abstract: We study the relationship between suicide rates and socioeconomic factors by using a panel data at Italian province level in the time span 1996-2005. Our analysis focuses on the impact of social norms on suicidal behaviours. In particular, beyond the usual social correlates of suicide rates, we propose an aggregate measure of social conformity which refers to the religious sphere as an area of conflict between individual and social behaviours. GMM and dynamic spatial panel data approach are implemented to control for serial and spatial autocorrelation. The results confirm the primary role of family, alcohol consumption and population density in explaining the suicide rates in Italy, while the economic variables, namely income per capita and economic growth, do not appear to have any effects.

Does more crime mean fewer jobs and less economic growth?

European Journal of Law and Economics (2013), vol. 36 (1), pp. 183-207  (with M.Pulina)

Abstract: This paper employs an Autoregressive Distributed Lags approach to investigate how a set of economic variables and a deterrence variable affect criminal activity. Furthermore, it highlights the extent to which crime is detrimental for the economic activity. The case study is Italy for the time span 1970 up to 2004. A Granger causality test is also implemented to establish temporal interrelationships. The empirical evidence has shown that the lack of deterrence positively affects each type of crime and especially thefts. All crime typologies have a negative effect on legal economic activity, reducing the employment rate. Furthermore, homicides, robbery, extortion and kidnapping have a crowding-out effect on economic growth. 

The Effect of Tourism on Crime in Italy: A Dynamic Panel Approach

Economics: The Open-Access, Open-Assessment E-Journal, Vol. 6, 2012-25 (with B.Biagi and MG.Brandano)

Abstract: The purpose of this paper is to demonstrate that, for the case of Italy, ceteris paribus, tourist areas tend to have a greater amount of crime than non-tourist ones in the short and long run. Following the literature of the economics of crime à la Becker (Crime and Punishment: An Economic Approach, 1968) and Enrlich (Participation in Illegitimate Activities: A Theoretical and Empirical Investigation, 1973) and using a System GMM approach for the time span 1985–2003, the authors empirically test whether total crime in Italy is affected by the presence of tourists. Findings confirm the initial intuition of a positive relationship between tourism and crime in destinations. When using the level rather than the rate of total crime and controlling for the equivalent tourists (i.e. the number of tourists per day in a given destination) the effect of the tourist variable is confirmed. Overall results indicate however that the resident population has a greater effect on crime than the tourist population. Therefore, the main explanation for the impact of tourism on crime seems to be agglomeration effects.

Cycles in Crime and Economy: Leading, Lagging and Coincident Behaviors

Journal of Quantitative Criminology (2012), vol. 28 (2), pp. 295-317 (with E.Otranto)

Abstract: In the last decades, the interest in the relationship between crime and business cycle has widely increased. It is a diffused opinion that a causal relationship goes from economic variables to criminal activities, but this causal effect is observed only for some typology of crimes, such as property crimes. In this work we examine the pos- sibility of the existence of some common factors (interpreted as cyclical components) driving the dynamics of Gross Domestic Product and a large set of criminal types by using the nonparametric version of the dynamic factor model. A first aim of this exercise is to detect some comovements between the business cycle and the cyclical component of some typologies of crime, which could evidence some relationships between these variables; a second purpose is to select which crime types are related to the business cycle and if they are leading, coincident or lagging. Italy is the case study for the time span 1991 - 1 - 2004 - 12; the crime typologies are constituted by the 22 official categories classified by the Italian National Statistical Institute. The study finds that most of the crime types show a counter-cyclical behavior with respect to the overall economic performance, and only a few of them have an evident relation- ship with the business cycle. Furthermore, some crime offenses, such as bankruptcy, embezzlement and fraudulent insolvency, seem to anticipate the business cycle, in line with recent global events.

The role of family in suicide rate in Italy

Economics Bulletin (2010), vol. 31 (2), 1509-1519 (with V.Sterzi)

Abstract: We use national panel data at provincial level to investigate the relationship between suicide rates and socio-economic factors in Italy. The role of family, alcohol consumption, social conformism and population density are the main factors in explaining the suicide rate in Italy. Notably, the high heterogeneity between provinces are not explained by economic fluctuations and call the existence of clear relations between suicides rates and cultural/social correlates. In a further step, we check for the main determinats for the Northern provinces. The findings show that the density population and alcohol abuse play a key role in these provinces.

Counting the cost of crime in Italy

Global Crime (2010), vol. 11 (4), pp. 421-435 (with M. Vannini)

Abstract: We gauge the cost of crime in Italy by concentrating on a subset of offences covering about 64% of total recorded crime in year 2006. Following the breakdown of costs put forward by Brand and Price, we focus on the costs in anticipation, as a consequence and in response to a specific offence. The estimated total social cost is more than € 38 billion, which amounts to about 2.6% of Italy’s GDP. To show the usefulness of these measures, we borrow the elasticity estimates from recent studies concerning the determinants of crime in Italy and calculate the cost associated with the surge in crime fuelled by unemployment and pardons. Indeed, in both cases such costs are substantial, implying that they should no longer be skipped when assessing the relative desirability of public policies towards crime.

Testing the effects of crime on the Italian economy

Economics Bulletin (2010), vol. 30 (3), pp. 2063-2074 (with M. Pulina)

Abstract: This paper aims at assessing the causal and temporal relationships between crime and the economic indicators related to the aggregated demand function. The case study is Italy and a quarterly frequency is used (1981:1-2005:4). A Vector Autoregressive Correction Mechanism (VECM) is employed after having assessed the integration and cointegration status of the variables under investigation. Long and short run dynamics are estimated. A Granger causality test is also implemented to establish temporal interrelationships. The main findings are that, in the short run, crime positively effects GDP and government expenditure, while has a crowding out effect on exports. In the long run, crime positively leads imports and inflation, whereas negatively investments and government expenditure.

An investigation into the relationship between size and efficiency of the Italian hospitality sector: A window DEA approach

European Journal of Operational Research (2010), vol. 204 (3), 613-620 (with M. Pulina and A. Paba)

Abstract: This paper analyses the efficiency of hotels across all of the 20 regions in Italy using a data envelopment analysis (DEA). The empirical results indicate that Sardinia can be considered as a region “falling further behind”, whereas some regions in the North and Centre of Italy can be regarded as “moving ahead”. Using the island of Sardinia as a case study, approximately 150 firms are analysed in detail over the time span 2002 to 2005. Via a window DEA, both technical and scale efficiencies are computed. An efficiency comparison amongst hotels categorised by size and municipality is run. Finally, policy implications are drawn from the empirical findings that advise how to improve hotels that attained low efficiency scores.

Does crime affect the economic growth?

Kyklos (2010), vol. 63 (3), pp. 330-345 (with E. Otranto)

Abstract: Criminal activity performs like a tax on the entire economy: it discourages domestic and foreign direct investments, it reduces firms’ competitiveness, and reallocates resources creating uncertainty and inefficiency. Although the impact of economic variables on crime has been widely investigated, there is not much concern about crime also affecting the overall economic performance. This work aims to bridge this gap by presenting an empirical analysis of the macroeconomic consequences of criminal activity. Italy is the case study for the time span 1979-2002. Dealing with a state space framework, a time varying parameter approach is employed to measure the impact of criminality on real Gross Domestic Product along time, and to measure the asymmetric impact in recession and expansion periods. The analysis is completed evaluating the effects of crime fluctuations in the long period by an impulse response analysis.