Research

CEP/Bocconi (European) Policing and Crime Workshops

Chicago/LSE conference: Economics of Crime and Justice

2019 Program; 2021 Program; 2022 Program; 2023 Program; 2024 Program

Work on Policing and Crime

The Effect of Police Response Time on Crime Detection (with Jordi Blanes i Vidal)

Review of Economic Studies, Volume 85, Issue 2, April 2018, Pages 855–891. See also the non-technical summary.We study whether faster police response times help to combat crime by increasing the likelihood of an arrest. To identify causal effects, we exploit discontinuities in distance to the response station across locations next to each other, but on different sides of division boundaries. We find that faster response times lead to a large increase in the likelihood of detecting (i.e. 'clearing') crimes. The effects are stronger for higher priority calls. Part of the mechanism is the higher likelihood that a suspect will be named by a victim or witness when the police attend the scene more promptly.

Face-to-Face Communication in Organisations (with Diego Battiston and Jordi Blanes i Vidal)

Review of Economic Studies, Volume 88, Issue 2, March 2021, Pages 574-609 . See also the non-technical summary.Communication is integral to organisations and yet field evidence on the relation between communication and worker productivity remains scarce. We argue that a core role of communication is to transmit information that helps co-workers do their job better. We build a simple model in which the optimal amount of communication trades-off this benefit against the time cost incurred by the sender, and use it to derive a set of empirical predictions. We then exploit a natural experiment in an organisation where problems arrive and must be sequentially dealt with by two workers. For exogenous reasons, the first worker can sometimes communicate face-to-face with their colleague. Consistently with the predictions of our model we find that: (a) the second worker works faster (at the cost of the first worker having less time to deal with incoming problems) when face-to-face communication is possible, (b) this effect is stronger when the second worker is busier and for homogenous and closely-located teams, and (c) the (career) incentives of workers determine how much they communicate with their colleagues. We also find that workers partially internalise social outcomes in their communication decisions. Our findings illustrate how workers in teams adjust the amount of mutual communication to its costs and benefits.

Commuting for Crime (with Monica Langella and Alan Manning)

The Economic Journal: Online (27 Oct 2023); CEP Discussion Paper No. 1747.People care about crime, with the spatial distribution of both actual and perceived crime affecting the amenities from living in different areas and residential decisions. The literature finds that crime tends to happen close to the offender’s residence but does not clearly establish whether this is because the location of likely offenders and crime opportunities are close to each other or whether there is a high commuting cost for criminals. We use a rich administrative dataset from one of the biggest UK police forces to disentangle these two hypotheses, providing an estimate of the cost of distance and how local socio-economic characteristics affect both crimes that are committed and the offenders’ location. We find that the cost of distance is very high and has a great deterrence effect. We also propose a procedure for controlling for the selection bias induced by the fact that offenders’ location is only known when they are caught.

Prices, Policing and Policy: The Dynamics of Crime Booms and Busts (with Steve Machin, Matteo Sandi and Rob Witt)

Journal of the European Economic Association, Volume 18, Issue 2, April 2020, Pages 1040–1077. See also the non-technical summary.In many historical episodes, the extent of criminal activity has displayed booms and busts. One very clear example is the case of metal crime, where in the face of big increases in value driven by world commodity prices, the incidence of metal thefts in the UK (and elsewhere) rose very sharply in the 2000s. Early in the current decade, they fell sharply again. This paper studies the roles of prices, policing and policy in explaining these crime dynamics. The empirical analysis shows sizeable and significant metal crime-price elasticities, in line with the idea that changing economic returns do shape crime. However, the rapid upward and downward trends are not only due to price changes. Their temporal evolution is also explained by changes in policing and policy. On the former, a difference-in-differences approach is used to document an important role of policing as a consequence of an anti-metal crime operation introduced in 2012. On the latter, the introduction of the Scrap Metal Dealers Act 2013 is exploited to study the impact of policy on the economic activity of scrap metal dealers in England and Wales. Results from our difference-in-differences specification suggest that the tougher regulatory system introduced by the policy hindered the economic activity of pre-existing dealers, reflecting the reduced market size for potential metal criminals to sell what they have stolen.

Comparing Conventional and Machine-Learning Approaches to Risk Assessment in Domestic Abuse Cases (with Jeffrey Grogger, Ria Ivandic, and Sean Gupta)

Journal of Empirical Legal Studies: Volume 18, Issue 1, March 2021, Pages 90-130. CEP Discussion Paper No. 1676; NBER WP 28293; Becker Friedman Institute WP 2021-01. We compare predictions from a conventional protocol-based approach to risk assessment with those based on a machine-learning approach. We first show that the conventional predictions are less accurate than, and have similar rates of negative prediction error as, a simple Bayes classifier that makes use only of the base failure rate. A random forest based on the underlying risk assessment questionnaire does better under the assumption that negative prediction errors are more costly than positive prediction errors. A random forest based on two-year criminal histories does better still. Indeed, adding the protocol-based features to the criminal histories adds almost nothing to the predictive adequacy of the model. We suggest using the predictions based on criminal histories to prioritize incoming calls for service, and devising a more sensitive instrument to distinguish true from false positives that result from this initial screening.

The Gender Reveal: The Effect of Sons on Young Fathers’ Criminal Behavior and Labor Market Activities (with Kabir Dasgupta, André Diegmann, and Alexander Plum)

Labour Economics: Volume 78, October 2022, 102224. CEP Discussion Paper No. 1732.Based on New Zealand’s administrative court charges data, we document child gender-specific differences in future criminal behavior of young fathers. The deterrent impact of having a son on the future likelihood of receiving convictions persists for as long as ten years post-childbirth. Utilizing population-wide monthly tax registers and Census data, we provide key insights into the role model hypothesis. We show that young fathers with a son have (i) a higher likelihood of being in employment, (ii) higher wages & salaries, (iii) lower benefit dependency, (iv) better qualification, and (v) a higher likelihood of being in a partnered relationship.

Football, Alcohol and Domestic Abuse (with Ria Ivandic, Neus Torres-Blas and Yasaman Saeidi)

Journal of Public Economics: Forthcoming; CEP Discussion Paper No. 1781.We study the role of alcohol and emotions in explaining the dynamics in domestic abuse following major football games. We match confidential and uniquely detailed individual call data from Greater Manchester with the timing of football matches over a period of eight years to estimate the effect on domestic abuse. We first observe a 5\% decrease in incidents during the 2-hour duration of the game suggesting a substitution effect of football and domestic abuse. However, following the initial decrease, after the game, domestic abuse starts increasing and peaks about ten hours after the game, leading to a positive cumulative effect. We find that all increases are driven by perpetrators that had consumed alcohol, and when games were played before 7pm. Unexpected game results are not found to have a significant effect.

Jihadi Attacks, Media and Local Hate Crime (with Ria Ivandic and Steve Machin)

Journal of Law & Economics: Forthcoming. CEP Discussion Paper No. 1615; CEPR Discussion Paper No. DP13743; Vox.Empirical connections between local anti-Muslim hate crimes and international jihadi terror attacks are studied. Based upon rich administrative data from Greater Manchester Police, event studies of ten terror attacks reveal an immediate big spike up in Islamophobic hate crimes and incidents when an attack occurs. In subsequent days, hate crime is amplified by real-time media. It subsequently attenuates, but hate crime incidence cumulates to higher levels than prior to the series of attacks. The overall conclusion is that, even when they reside in places far away from where jihadi terror attacks take place, local Muslim populations face a media magnified likelihood of hate crime victimization following international terror attacks. This matters for community cohesion in places affected by discriminatory hate crime and, from both a policy and research perspective, means that the process of media magnification of hate crime needs to be better understood.

Peer pressure and manager pressure in organisations (with Diego Battiston, Jordi Blanes i Vidal, and Katalin Szemeredi ). CEP Discussion Paper No. 1924.

We study the interaction between horizontal (peer) and vertical (manager) social factors in workers' motivation. In our setting, individuals work using open-plan desks. Using a natural experiment, we identify a sharp increase in workers' productivity following the occupation of adjacent desks. We link this peer pressure effect to two key aspects of the worker-manager relation. First, we find stronger peer pressure when managers monitor workers less. Second, we find stronger peer pressure among workers performance-evaluated by the same manager. In a set of counterfactual exercises, we illustrate how organisations could take advantage of these interdependencies to increase worker productivity.

Changing Patterns of Domestic Abuse during COVID-19 Lockdown (with Ria Ivandic and Ben Linton)

Economica: R&R. CEP Discussion Paper No. 1729.The effects of preventing a COVID-19 health crisis have had unintended consequences on domestic abuse (DA) victimization. We contribute to the literature on domestic abuse in lockdown by providing insight on how changing patterns of domestic abuse can explain differences in magnitudes reported across studies. We examine the patterns of domestic abuse during the COVID-19 lockdown in Greater London and find that the lockdown changed the nature of reporting and the type of relationship the abuse occurs within. While abuse by current partners as well as family members increased on average by 8.1% and 17.1% respectively over the lockdown period, abuse by ex-partners declined by 11.4%. These findings show that reporting the average change in domestic abuse during lockdown can be misleading when designing a policy response. Moreover, we show that all the increase in DA calls is driven by third party reporting, particularly evident in areas with high density. This suggests that under-reporting is present in the lockdown, particularly in households where the abuse cannot be reported by an outsider. Although these findings pertain to the COVID-19 lockdown, they also highlight the role that victim exposure and proximity has in affecting domestic abuse.

Criminal charges, risk assessment and violent recidivism in cases of domestic abuse (with Dan A. Black, Jeffrey Grogger, and Koen Sanders). CEP Discussion Paper No. 1897. IZA Discussion Paper No. 15885 .

Domestic abuse is a pervasive global problem. Here we analyze two approaches to reducing violent DA recidivism. One involves charging the perpetrator with a crime; the other provides protective services to the victim on the basis of a formal risk assessment carried out by the police. We use detailed administrative data to estimate the average effect of treatment on the treated using inverse propensity-score weighting (IPW). We then make use of causal forests to study heterogeneity in the estimated treatment effects. We find that pressing charges substantially reduces the likelihood of violent recidivism. The analysis also reveals substantial heterogeneity in the effect of pressing charges. In contrast, the risk-assessment process has no discernible effect.

Under pressure: Victim withdrawal and police officer workload (with Ekaterina Oparina). CEP Discussion Paper No. 1985. Also: LSE Blog Post.

This paper addresses the relationship between a police officer's workload and the likelihood of statement withdrawal of domestic abuse victims. We focus our analysis on high-risk cases reported to Greater Manchester Police from January 2014 to March 2019. Using this unique dataset, combined with institutional knowledge, we show that adding 10 more cases to a police officer's monthly workload is associated with an increase of the probability of statement withdrawal of 3 percentage points, or 17% of the average withdrawal rate in our sample. The increased workload is likely to be the outcome of a substantial reduction in the police budget, implying that this paper provides additional indirect evidence of the secondary costs of austerity policies.

Domestic Abuse: What Do We Know About It? (with Jordi Blanes i Vidal and Lukas Bolte)

In this policy paper we are trying to give an overview of patterns and determinants of Domestic Abuse, and influencing factors like weather, football, and a variety of other temporal and spatial dimensions. We find that temporally domestic abuse is higher from Friday to Sunday, and that certain events increase the number of domestic abuses such as New Year’s Eve or Football. The weather plays an important influencing factor, with high temperatures being related with higher quantities of domestic abuse cases, while rain decreases it. Football increases domestic abuse in total, but also for groups higher up the social strata. We also observe the effect of socio-economic factors such as income, race, religion and education and see how each one affects differently the domestic abuses.

COVID-19, Poverty, and Crime (with Carmen Villa Llera)

CEP Covid-19 Analysis Series; UKRI Summary.In this short paper we document changing crime trends in England and Wales in the context of the current global pandemic. Using publicly available data, we study the spatial and temporal differences in the uptake of furlough and unemployment support schemes and their correlation to crime rates. During the first lockdown that span from mid March to mid May 2020 there was a decrease in all crime categories except Anti-social behaviour and Drug offences. Since lockdown was lifted, many crimes remain at lower levels but there are important differences in crime trends that correlate with economic performance. In some areas, particularly those that had traditionally higher number of claimants (unemployment above the median), show higher levels of some acquisitive crime and violence when compared to the pre-pandemic period. This evidence suggests that there has been a structural change in "demand for crime" as well as changes in policing as a result of the global pandemic.

Gangs and Knife Crime in London (with Steve Machin and Carmen Villa-Llera)

We describe the socio-economic characteristics of street-gang areas in London, explore gang formation dynamics, and analyse the spatial correlation between gangs and violent crime. Gang areas form in areas with higher unemployment, lower education, and a higher proportion of lone-parent families. Social housing is one of the key predictors of gang areas. Areas that are gang territories have higher levels of crime in various crime categories. Both having a gang in an area and proximity to a gang correlate positively with violent crime. We estimate the short-term effect of disrupting a gang within a borough as decreasing knife crime on ward level by about 15%.

On the State of Anti-Money Laundering

With Denmark’s Financial Services Industry having now caught up with the international level of anti-money laundering (AML) (and other) compliance standards, it is time to look at the system in a holistic manner and ask questions about efficiency, effectiveness and costs. Compliance is important, as it ensures a clean financial system and provides efficient support to the police in the fight against organised crime, amongst others. The argument I am making in this short note is that the global AML compliance system does little to deter money laundering activity by professional actors. Currently, we are spending too much time on the ‘small’ fish, and not the ‘large’ ones. However, the system imposes substantial costs on banks, and hence society at large (a back-of-the-envelope calculation puts the annual costs for compliance in banks operating in Denmark at just under USD 1 billion pa). As I have been arguing for some time, the system will need to be redesigned so that it is sufficiently risk-based, with large parts of it being automated. This will both bring down the costs and make better use of our compliance staff to focus on investigations. We are making a number of recommendations on technical automation below, but one important pre-condition will be that both the law and financial regulators’ guidelines, are harmonised across the Nordic countries (and beyond).

Opinion Piece: Discussion Paper of the State of Anti-Money Laundering

Case Study: The Danske Bank Money Laundering Scandal: A Case Study

Open Data on Sanctions, PEPs, and Panama Papers: Point.Exposed (updated weekly)

Work on Law and Economics

Deceived by ‘S’: Corporate Scandals and ESG (with Christina Kjaer)

In this paper, we study the impact of environmental, social and governance (ESG) ratings on the likelihood of subsequent corporate scandals. We find that the ‘S’ score (social responsibility) has a predictive power on scandals, while the overall ESG ratings has not. This finding holds for all our specifications. The underlying question that we want to address with this paper is whether the ratings reflect firms’ real efforts to act responsibly towards the society, or whether it constitutes deception. Our work contributes to the ongoing ‘aggregate confusion’ discussion amongst ESG scholars, showing that there is little informational content in an aggregate score (as it measures very diverse dimensions). Contrary to our expectation, the ‘S’ score is positively correlated with the likelihood of corporate scandals, suggesting that the ‘S’ score does not live up to measuring a company’s social responsibility, including the ‘commitment to being a good corporate citizen’ (Refinitiv, 2022). Our analysis is based on a hand-collected matched sample of 113 global corporate scandals.

Management Insulation and Bank Failures (with Daniel Ferreira, David Kershaw and Edmund Schuster)

Journal of Financial Intermediation: Volume 47, July 2021, 100909We propose a management insulation measure based on charter, bylaw, and corporate law provisions that make it difficult for shareholders to oust a firm’s management. Unlike the existing alternatives, our measure considers the interactions between different provisions. We illustrate the usefulness of our measure with an application to the banking industry. We find that banks in which managers were more insulated from shareholders in 2003 were significantly less likely to be bailed out in 2008/09. These banks were also less likely to be targeted by activist shareholders, as proxied by 13D SEC filings. By contrast, popular alternative measures of insulation -- such as staggered boards and the Entrenchment Index - fail to predict both bailouts and shareholder activism.

Say on Pay: Do Shareholders Care? (with Carsten Gerner-Beuerle)

A video of us discussing the paper can be found here. Featured on the LSE Business Review Blog, and the Harvard Law School Blog.This paper examines the impact of enhanced executive remuneration disclosure rules and the introduction of dual voting rights under UK regulations of 2013 on the voting patterns of shareholders. Based on a hand-collected dataset of the pay information disclosed by FTSE 350 companies from 2013-2017, we establish that shareholders guide their vote by top line salary figures and the recommendations of proxy advisors. We do not find any evidence that they assess the structure of a company’s remuneration policy comprehensively or penalise badly structured policies with their binding policy vote. Our results challenge the merits of imposing additional reporting costs on firms and introducing complex say on pay regulations.

Work on Corporate Boards

Women on Boards in Finance and STEM Industries (with Renee Adams)

American Economic Review, 106(5), 277-281 (P&P). Featured on the Harvard Law School Blog.We document that women are less represented on corporate boards in Finance and more traditional STEM industry sectors. Even after controlling for differences in firm and country characteristics, average diversity in these sectors is 24% lower than the mean. Our findings suggest that well-documented gender differences in STEM university enrolments and occupations have long-term consequences for female business leadership. The leadership gap in Finance and STEM may be difficult to eliminate using blanket boardroom diversity policies. Diversity policies are also likely to have a different impact on firms in these sectors than in non-STEM sectors.

Women in Finance (with Renee Adams)

Featured on the Oxford Business Law Blog.Across countries, banks have less gender diverse boards than other firms. Bank board diversity is particularly low in countries with greater gender gaps in PISA math scores and lower average math scores. We find similar results using state-level NAEP math scores in the United States. The influence of math scores appears to transcend standard cultural explanations. Female directors are more likely to have an MBA in banks, especially in countries with greater gender gaps in math scores. Our evidence suggests that differences in educational outcomes for boys and girls may have long-lasting implications for their career development.

Barriers to Boardrooms (with Renee Adams)

Boardroom diversity policies link societal and corporate governance objectives. To understand whether they can meet both objectives, we argue one must understand why female directors are relatively underrepresented. We document that boardroom diversity is lower than most surveys suggest. We then show that across countries and US states there are more women in the director pool when more women work full time. However, working full-time may not be sufficient for women to make it to the top because of economic and cultural barriers. Our evidence suggests current boardroom diversity policies may be less effective when barriers to boardrooms are bigger.

The Inner Workings of the Board: Evidence from Emerging Markets (with Ralph De Haas and Daniel Ferreira)

Emerging Markets Review: Volume 48, September 2021, 100777. Featured on the Oxford Business Law Blog.We survey non-executive directors in emerging markets to obtain detailed information about the inner workings of corporate boards across a variety of institutional settings. We document substantial variation in the structure and conduct of boards as well as in directors’ perceptions about the local legal environment. Further analysis indicates that directors who feel adequately empowered by local legislation are less likely to actively vote against board proposals. They also form boards that play a stronger role in the company’s strategic decision making. This suggests that a supportive legal environment allows directors to focus more on their advisory as opposed to their monitoring role.

Corporate Boards in Europe: Size, Independence and Gender Diversity (with Daniel Ferreira)

This book chapter provides a comprehensive description of the cross-section of board characteristics across Europe. We use data from more than 2,000 companies from 28 European countries in 2010 to relate the cross-sectional distribution of board characteristics to country, industry and firm characteristics. Our analysis focuses mainly on three board characteristics: board size, independence and gender diversity. We find that country characteristics explain a significant part of the variation in board independence and gender diversity, which suggests that country-level governance rules play an important role in the determination of these variables. In contrast, board size is mostly explained by firm and industry characteristics. Board size and board independence have decreased more in those firms that performed poorly in the recent financial crisis.