Can Safe Public Parks Cause More Crime?
Macro economists do not have a monopoly on term "crowding out". The NY Times uses it today in an article about the night use of Central Park. As crime has fallen in the Big Apple and people are feeling safer, they are dropping their guard and taking more risks by walking in the park at night. So, the cops, abortion, and anti-lead reduce the crime and this "public investment" in safe streets displaces "private self protection" as people unlock their front door and go for a walk at night.
Leah Boustan, Paul Rhode and I will present a new paper at the AEA meetings next week that will make a similar point. We study U.S migration patterns in the 1920s and 1930s as a function of several variables including local natural disaster shocks. Our current results suggest a similar "crowding out" hypothesis. Back int the 1920s before the New Deal and large place based federal transfers, young men were less likely to move to areas that had experienced natural disasters. While in the 1930s and more recently, it appears that migrants are actually attracted to disaster areas as these areas are rebuilding and attracting Keynesian rebuilding funds. Robert Barro would appreciate this result, do you?
If you like some math in your life, I suggest that you read this paper by Kousky, Luttmer and the Zech. For lazy people, here is the abstract to their paper
"Hurricane Katrina did massive damage because New Orleans and the Gulf Coast were not appropriately protected. Wherever natural disasters threaten, the government—in its traditional role as public goods provider—must decide what level of protection to provide to an area. It does so by purchasing protective capital, such as levees for a low-lying city. (“Protection” also consists of prohibiting projects that raise risk levels, such as draining swamps.) We show that if private capital is more likely to locate in better-protected areas, as would be expected, then the marginal social value of protection will increase with the level of protection provided. That is, the benefit function is convex, contrary to the normal assumption of concavity. When the government protects and the private sector invests, there may be multiple Nash equilibria due to the ill-behaved nature of the benefit function. Policy makers must compare them, rather than merely follow local optimality conditions, to find the equilibrium offering the highest social welfare. There is usually considerable uncertainty about the amount of private investment that will accompany any level of protection, further complicating the government’s choice problem. We show that when deciding on the level of protection to provide now, the government must take account of the option value of increasing the level of protection in the future. We briefly examine but dismiss the value of rules of thumb, such as building for 1000-year floods or other rules that ignore benefits and costs."
Leah Boustan, Paul Rhode and I will present a new paper at the AEA meetings next week that will make a similar point. We study U.S migration patterns in the 1920s and 1930s as a function of several variables including local natural disaster shocks. Our current results suggest a similar "crowding out" hypothesis. Back int the 1920s before the New Deal and large place based federal transfers, young men were less likely to move to areas that had experienced natural disasters. While in the 1930s and more recently, it appears that migrants are actually attracted to disaster areas as these areas are rebuilding and attracting Keynesian rebuilding funds. Robert Barro would appreciate this result, do you?
If you like some math in your life, I suggest that you read this paper by Kousky, Luttmer and the Zech. For lazy people, here is the abstract to their paper
"Hurricane Katrina did massive damage because New Orleans and the Gulf Coast were not appropriately protected. Wherever natural disasters threaten, the government—in its traditional role as public goods provider—must decide what level of protection to provide to an area. It does so by purchasing protective capital, such as levees for a low-lying city. (“Protection” also consists of prohibiting projects that raise risk levels, such as draining swamps.) We show that if private capital is more likely to locate in better-protected areas, as would be expected, then the marginal social value of protection will increase with the level of protection provided. That is, the benefit function is convex, contrary to the normal assumption of concavity. When the government protects and the private sector invests, there may be multiple Nash equilibria due to the ill-behaved nature of the benefit function. Policy makers must compare them, rather than merely follow local optimality conditions, to find the equilibrium offering the highest social welfare. There is usually considerable uncertainty about the amount of private investment that will accompany any level of protection, further complicating the government’s choice problem. We show that when deciding on the level of protection to provide now, the government must take account of the option value of increasing the level of protection in the future. We briefly examine but dismiss the value of rules of thumb, such as building for 1000-year floods or other rules that ignore benefits and costs."
posted by Matthew E. Kahn at 4:42 PM
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