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The Cost of Crime and its Economic Impact on Colorado: Crime’s Impact on the Economy and Residents

Teams & Fellows Statement

CSI is committed to independent, in-depth research that examines the impacts of policies, initiatives, and proposed laws so that Coloradans are educated and informed on issues impacting their lives. CSI’s commitment to institutional independence is rooted in the individual independence of our researchers, economists, and fellows. At the core of CSI’s mission is a belief in the power of the free enterprise system. CSI’s work explores ideas that protect and promote jobs and the economy, and the CSI team and fellows take part in this pursuit with academic freedom. The CSI team’s work is informed by data-driven research and evidence. The views and opinions of fellows do not reflect the institutional views of CSI. CSI operates independently of any political party and does not take positions.

Contents:

About the Author 2

About Common Sense Institute. 2

Teams & Fellows Statement 2

Key Findings. 6

Crime Rates in Colorado. 8

Crime Concentration by County. 12

Cost of Crime in Colorado. 16

Cost of Crime in Colorado by County. 19

Economic Impact of Crime. 21

Incarcerated Population Becomes Zero. 22

Cost of Crime Related to Quality of Life Decreases to Zero. 23

Impact of Decreased Insurance Premium Related to Tangible Cost of Crime Becoming Zero. 23

Combined Impact of Zero Cost of Crime.24

Crime in the First Half of 2023. 25

Concluding Remarks 28

Appendix 29

Figure 1 – Average Monthly Crime Rate in Colorado. 9

Figure 2 – Change in Average Monthly Crime Rate 2021–2022. 10

Figure 3 – County Shares of Crime. 11

Figure 4 – Number of Crimes by County. 12

Figure 5 – Crime Concentration for All Crime. 13

Figure 6 – Crime Concentration for Crimes Against Person. 14

Figure 7 – Crime Concentration for Crimes Against Property. 15

Figure 8 – Crime Concentration for Crimes Against Society. 16

Figure 9 – Cost of Crime in 2022. 18

Figure 10 – Cost of Crime in Colorado by County. 19

Figure 11 – Per-resident Cost of Crime by County. 20

Figure 12 – Employment Impact of Zero Prison Population. 22

Figure 13 – Economic Impact of the Cost of Quality of Life Due to Zero Crime. 23

Figure 14 – Employment Impact of a 25% Decrease of Insurance Premiums. 24

Figure 15 – Total Employment Impact of Crime Decreasing to Zero. 25

Figure 16 – Total Crime Rate (per 100,000). 25

Figure 17 – Crime against Persons (Crime Rate per 100,000). 26

Figure 18 – Violent Crime (Crime Rate per 100,000). 27

Figure 19 – Crimes against Property (Crime Rate per 100,000). 28

Figure 20 – Crime Concentration by Type of Crime by County. 29

Cost of Crime and Its Economic Impact on Colorado: The Impact on the Economy and Residents Few people in Colorado have not directly experienced crime. From property offenses to violent crimes, every crime leaves a traumatized victim. Whether the wounds are physical, psychological, or financial, it is important to acknowledge the profound effects that a crime can have on its victims. At Common Sense Institute, our goal is to address the economic impact of crime while remaining conscious of the suffering that it causes. This report analyzes the cost of crime in Colorado and the economic impact on households. This study encompasses the period of 2008 to 2023 and the data comes from Colorado Crime Statistics (2023). Crime results in direct or tangible costs including unrecovered stolen property, damaged property, victims’ out-of-pocket medical expenses, the cost of police, courts and correctional institutions, and lost earnings by both victims and perpetrators who are arrested and convicted. Crime also inflicts indirect or intangible costs like the pain and suffering of victims, reduced quality of life for everyone, and lower levels of investment and lower property values.[i] Intangible costs are difficult to measure with precision but, among those who have estimated them, there is a consensus that the intangible cost of crime far exceeds the tangible cost. Reducing current rates of murder, rape, assault, theft, and robbery would produce a wide range of savings and other benefits to families, individuals, property owners and taxpayers. All estimates of the cost of crime in this report are adjusted for inflation and are reported in 2020 dollars so that costs can be compared across years. In 2021, after an extraordinary rise in crime, CSI estimated a total cost of crime of $31 billion. Although the cost declined slightly in 2022 to $27 billion, Colorado is on track to have another year of extraordinarily high crime-related costs in 2023. This is driven by an 18% increase in the murder rate; murder is the highest costing crime in the analysis at $8.8 million per incident.

Key Findings

  • The crime rate in Colorado was 28% higher in 2022 than in 2008 (see Figure 1).
  • The total cost of police-reported crime is $10.9 billion, and the total cost of all crime is $27.2 billion (see the following graph).
    • Tangible police-reported crime: $5.1 billion
    • Tangible total crime: $7.9 billion
    • Intangible police-reported crime: $5.8 billion
    • Intangible total crime: $19.3 billion
  • The total cost of crime in 2022 was equivalent to $4,623 per Coloradan.
    • The overall cost of crime declined from 2021 levels, largely driven by a 12% reduction in rape and other sexual assault crimes. The reduction in these crimes, which produce remarkably excessive costs, offset cost increases due to rising aggravated assault and auto theft.
    • The per capita cost of all crime is highest in these 10 counties: Adams ($10,243), Pueblo ($8,176), Denver ($7,585), Alamosa ($7,576), Kiowa ($7,404), Saguache ($5,925), Montezuma ($5,639), Bent ($5,497), Otero ($5,253), and Garfield ($5,138).
  • Both the tangible and intangible costs of crime impact the state’s economy. For every 1% decrease in the number of crimes, the state adds:
    • 474 jobs
    • $56.2 million to GDP
  • If the prison population were set to zero (no one is sentenced to prison), total employment would fall by 10,335 jobs and GDP would fall by $1.08 billion.
  • If crime were to decrease to zero, the economic impact of increased quality of life would add $1.80 billion to GDP and increase employment by 17,335.
  • If insurance premiums were to decrease by 25% as a result of crime falling to zero, consumers would have $1.71 billion more in their pockets to spend. It would also add 40,445 jobs and increase GDP by $4.97 billion.
  • The total impact of zero crime would be an increase of 47,319 jobs and a $5.62 billion increase in GDP.
  • The concentration of crime (share of crime/share of population) is highest in Adams County, followed by Gilpin, Denver, Alamosa, and Pueblo.
  • Adams and Denver Counties combined account for 40% of all crimes but only 21% of the state’s population.
  • Adams County has the highest concentration of crimes against persons, followed by Alamosa.

 

Crime Rates in Colorado

The average monthly crime rate in 2020 was 566.5 incidents per 100,000, which was an increase of 28.2% above 2008’s 442.0 incidents per 100,000. Crime peaked in 2021 at 585.6 per 100,000 and declined by 3.3% in 2022 (see Figure 1).

Figure 1- Average Monthly Crime Rate in Colorado

Figure 2 shows the changes in rates of major categories of crime from 2021 to 2022. Motor vehicle thefts increased the most (10.2%) followed by aggravated assault (8%). Rape/other sexual assault exhibited the largest decrease (-12%).

Figure 2 – Change in Average Monthly Crime Rate 2021–2022

Figure 3 shows the 12 most populous counties’ shares of crime incidents. The diagonal line represents concentrations of crime exactly proportional to population (consistent with the statewide average). Counties that are above the line have lower-than-average concentrations of crime; counties below the line exhibit higher-than-average concentrations. Counties near the line have levels of crime incidents roughly equal to their expected values given their populations. Denver and Adams Counties account for a disproportionate share of the state’s total crime relative to their populations. Jefferson and Pueblo Counties do as well but to a lesser extent.

Figure 3 – County Shares of Crime

Figure 4 shows the number of crimes reported in each county in 2022. Denver had the highest number of crimes, followed by Adams County. Combined, these two counties account for 39.7% of all reported crimes in Colorado. Further on in this report, these crime statistics are used to calculate the cost of crime by county.

Figure 4- Number of Crimes by County

Number of Crimes by County in 2022
No. of Crimes No. of Crimes
Colorado 397,419
Denver County 80,704 Clear Creek County 379
Adams County 76,864 Chaffee County 327
El Paso County 45,333 Prowers County 273
Jefferson County 42,670 Archuleta County 266
Arapahoe County 23,916 Kit Carson County 264
Larimer County 20,897 Bent County 220
Boulder County 19,233 Grand County 208
Pueblo County 17,149 Saguache County 200
Weld County 16,985 Park County 190
Douglas County 11,846 Huerfano County 179
Mesa County 9,746 Washington County 166
Broomfield County 4,314 Custer County 165
Garfield County 2,437 Crowley County 152
Fremont County 1,894 San Miguel County 125
Montrose County 1,799 Elbert County 118
Eagle County 1,767 Yuma County 114
Alamosa County 1,688 Rio Blanco County 110
Summit County 1,541 Lincoln County 91
Delta County 1,307 Ouray County 80
Montezuma County 1,265 Lake County 78
Morgan County 1,144 Kiowa County 70
Logan County 1,101 Dolores County 47
La Plata County 1,077 Conejos County 36
Routt County 1,062 Baca County 23
Teller County 911 Phillips County 23
Las Animas County 889 Jackson County 18
Otero County 851 San Juan County 13
Gilpin County 800 Hinsdale County 11
Moffat County 631 Sedgwick County 8
Pitkin County 566 Cheyenne County 0
Rio Grande County 557 Costilla County 0
Gunnison County 521 Mineral County 0
Source: Colorado Crime Stats
 

Crime Concentration by County

Crime concentration is calculated as a county’s share of total crime in Colorado divided by that county’s share of population multiplied by 100. Colorado’s crime concentration, for example, is 100% because 100% of the crime takes place in Colorado and the state has 100% of the population. Figures 5–8 show the crime concentrations of each of Colorado’s 64 counties for total crime, crime against persons, crime against property, and crime against society. Each figure highlights those counties that have crime concentrations higher than the state’s and, thus, whose residents are at higher-than-average risk of victimization. Figure 20 in the appendix shows the detailed crime concentration data behind Figures 5–8. Figure 5 shows county concentrations of total crime (all offenses). Out of 64 counties, only 6 have higher concentrations than the state average. These are Adams (214%), Alamosa (153%), Denver (190%), Gilpin (197%), Jefferson (107%) and Pueblo (143%).

Figure 5 – Crime Concentration for All Crime

  Figure 6 shows the highest county concentrations of crime against persons. This category includes assault, homicide, human trafficking, kidnapping/abduction, and sex crimes. Adams County has a high  concentration for of crimes against persons because it has an exceptionally large share of the state’s violent crime (23%), murder (22%), aggravated assault (23%), non-consensual sex offenses (19%), and robbery (28%).

Figure 6 – Crime Concentration for Crimes Against Person

Figure 7 shows the highest county concentrations of crime against property. This category includes arson, burglary/breaking & entering, destruction/damage/vandalism, larceny/theft, motor vehicle theft, robbery, and stolen property crimes. Adams County has the highest concentration.

Figure 7 – Crime Concentration for Crimes Against Property

  Figure 8 shows the highest county concentrations of crime against society. This includes drug/narcotic violations, betting/wagering, illegal gambling, sports tampering, pornography, prostitution, weapons violations, and animal cruelty. Gilpin County and Kiowa County have extremely high numbers of crimes related to drug/narcotic violations and drug equipment violations. Gilpin County is home to Black Hawk and Central City, the location of the majority of gambling establishments, and so has a high concentration of related crimes. Kiowa County registers a high concentration as well due to an unusually high number of drug violations for such a small population.

Figure 8 – Crime Concentration for Crimes Against Society

Cost of Crime in Colorado

Crime imposes large economic costs on its victims in addition to whatever loss of life or physical harm it causes. Crime also imposes large costs on communities through loss of property, lower property values, higher insurance premiums, higher taxes, lower productivity, lost earnings, and reduced investment. Additionally, the intangible cost of crime, including the victims’ pain, suffering, and inconvenience, is several times greater than the direct cost. Reducing crime can produce substantial economic benefits for individuals, communities, and taxpayers. To estimate the tangible and intangible cost of crime in Colorado, CSI utilized a model by Miller, et al., published in the Journal of Benefit-Cost Analysis titled "Incidence and Costs of Personal and Property Crimes in the United States, 2017.”[ii] In this report, all of its cost estimates are converted to 2020 dollars. The inputs to the model are the number of crimes for the following categories of police-reported crime: murder, rape, sexual assault, robbery, assault, arson, burglary, larceny/theft, motor vehicle theft, fraud, buying stolen property, vandalism, prostitution/pandering, drug possession/sales, gambling violations, weapons violations, liquor law violations, drunkenness, disorderly conduct, vagrancy, and curfew/loitering violations. Statistics for these crime categories were obtained from Colorado Crime Statistics.[iii] Many crimes go unreported to the police. This analysis accounts for this by inflating police-reported crime values based on national statistics on the ratio of unreported to reported crimes. The tangible cost of crime is the sum total of the following categories of cost: medical, mental health, lost productivity, property loss, public services related to crime, adjudication and sanctioning, and perpetrators’ lost work. The intangible cost of crime is defined as costs related to quality-of-life losses. The total cost of crime is the sum total of tangible and intangible costs. Figure 9 shows the costs of crime by category of police-reported crime and total crime. The tangible cost of police-reported crime is $5.1 billion, the intangible (quality of life) cost is $5.8 billion, and the total cost is $10.9 billion. The tangible cost of all crime, which includes police-reported crime and non–police-reported crime, is $7.9 billion, the intangible cost is $19.3 billion, and the total cost is $27 billion ($4,623 per Coloradan).

Figure 9 – Cost of Crime in 2022

2022 Total Cost of Crime in Colorado, (Millions of 2020 Dollars)
  PR = Police-reported Medical Mental Health Productivity Property Loss Public Services * Adjudication & Sanctioning Perpetrator Work Loss Subtotal: Tangible Costs Quality of Life Total Cost
Murder $4.85 $5.02 $817.56 $0.09 $74.45 $216.11 $79.52 $1,197.59 $2,154.92 $3,352.51
Rape $111.88 $275.39 $327.28 $12.76 $0.52 $15.10 $7.54 $750.46 $14,177.50 $14,927.96
Rape (PR) $25.26 $45.87 $54.01 $1.34 $7.25 $325.47 $162.57 $621.77 $2,222.01 $2,843.77
Other Sexual Assault (PR) $0.12 $0.30 $0.36 $0.01 $0.01 $0.06 $0.03 $0.90 $15.47 $16.37
Robbery $11.66 $1.40 $27.62 $12.32 $7.31 $106.94 $54.06 $221.31 $98.12 $319.43
Robbery (PR) $8.63 $0.95 $20.44 $6.71 $8.09 $71.15 $35.97 $151.94 $70.00 $221.94
Assault $217.15 $24.42 $162.22 $6.51 $339.85 $453.22 $210.88 $1,414.26 $2,793.95 $4,208.21
Assault (PR) $119.24 $25.27 $130.79 $5.32 $348.00 $386.05 $179.62 $1,194.31 $1,308.33 $2,502.63
Arson $4.06 $0.07 $5.54 $32.25 $6.61 $4.29 $1.55 $54.36 $10.51 $64.87
Burglary $0.00 $0.00 $1.50 $107.79 $18.26 $56.50 $85.24 $269.28 $0.00 $269.28
Burglary (PR) $0.00 $0.00 $1.04 $76.92 $17.96 $19.13 $28.87 $143.93 $0.00 $143.93
Larceny/Theft $0.00 $0.00 $6.84 $209.83 $57.97 $588.09 $62.43 $925.16 $0.00 $925.16
Larceny/Theft (PR) $0.00 $0.00 $4.42 $150.21 $151.11 $351.70 $37.33 $694.77 $0.00 $694.77
Motor Vehicle Theft $0.00 $0.00 $4.74 $292.00 $30.43 $464.00 $221.98 $1,013.14 $0.00 $1,013.14
Motor Vehicle Theft (PR) $0.00 $0.00 $6.50 $401.39 $45.57 $103.57 $49.55 $606.59 $0.00 $606.59
Fraud (TC) $0.00 $0.00 $42.41 $1,368.53 $64.21 $45.02 $14.02 $1,534.19 $0.00 $1,534.19
Fraud (PR) $0.00 $0.00 $2.12 $68.51 $3.21 $2.25 $0.70 $76.80 $0.00 $76.80
Buying Stolen Property $0.00 $0.00 $0.00 $0.00 $7.20 $25.04 $8.48 $40.72 $0.00 $40.72
Vandalism $0.00 $0.00 $0.00 $27.49 $1.67 $48.56 $17.32 $95.03 $0.00 $95.03
Prostitution/Pandering $0.00 $0.00 $0.00 $0.00 $0.13 $0.43 $0.21 $0.76 $0.00 $0.76
Drug Possessions/Sales $0.00 $0.00 $0.00 $0.00 $98.41 $70.19 $34.02 $202.61 $0.00 $202.61
Gambling Violations $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Weapons Carrying $0.00 $0.00 $0.00 $0.00 $0.76 $24.81 $12.02 $37.59 $0.00 $37.59
Liquor Laws $0.00 $0.00 $0.00 $0.00 $0.20 $3.08 $1.49 $4.77 $0.00 $4.77
Drunkenness $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Disorderly Conduct $0.00 $0.00 $0.00 $0.00 $0.40 $6.24 $3.02 $9.65 $0.00 $9.65
Vagrancy $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Curfew/Loitering (PR) $0.00 $0.00 $0.00 $0.00 $0.05 $0.75 $0.36 $1.17 $0.00 $1.17
All PR Crime $162.2 $77.48 $1,042.79 $770.24 $771.07 $1,658.89 $652.64 $5,135.27 $5,781.23 $10,916.50
All Crime CO TC Crime $349.7 $306.60 $1,398.19 $2,138.08 $711.62 $2,130.68 $814.87 $7,849.76 $19,250.47 $27,023.44

 

Cost of Crime in Colorado by County

Based on the same model used to estimate the total cost of crime in Colorado, CSI estimated the cost of crime in each of Colorado’s 64 counties. Crime data was not available for Cheyenne, Costilla, and Mineral Counties. Therefore, there are no cost estimates for these counties. Figure 10 shows the total costs of police-reported and total crime. The table is sorted by the total cost of police-reported crime from largest to smallest. Denver had the highest cost of police-reported crime, followed by Adams County. Adams County has the highest cost of total crime.

Figure 10 – Cost of Crime in Colorado by County

Cost of Crime by County, Sorted by All Police-reported Crime (PR) (Millions of 2020 Dollars)
County All Police Reported Crime All Crime CO Total Crime County All Police Reported Crime All Crime CO Total Crime
Colorado $ 10,914.4 $27,023.4
Denver County $ 2,370.9 $5,349.4 Moffat County $ 10. $ 24.8
Adams County $ 2,277.2 $5,368.2 Rio Grande County $ 10.3 $ 32.3
El Paso County $ 1,459.1 $3,728.5 Gilpin County $ 9.7 $ 25.0
Jefferson County $ 794.6 $2,037.8 Pitkin County $ 9.5 $ 29.2
Pueblo County $ 632.4 $1,396.2 Bent County $ 8.3 $ 32.3
Boulder County $ 561.9 $1,567.1 Clear Creek County $ 8.3 $ 28.6
Weld County $ 484.8 $1,263.0 Chaffee County $ 7.1 $ 22.1
Larimer County $ 427.9 $1,243.4 Archuleta County $ 7.0 $ 20.0
Arapahoe County $ 389.3 $923.4 Lake County $ 5.6 $ 26.4
Douglas County $ 320.4 $978.3 Grand County $ 5.6 $ 21.8
Mesa County $ 243.6 $698.4 Kit Carson County $ 4.5 $ 12.5
Garfield County $ 108.4 $321.4 Park County $ 4.4 $ 13.2
Broomfield County $ 91.3 $246.2 Yuma County $ 3.9 $ 17.0
Fremont County $ 75.1 $ 150.3 Huerfano County $ 3.5 $ 10.8
Montezuma County $ 69.8 $ 149.4 Rio Blanco County $ 2.7 $ 8.4
Alamosa County $ 63.2 $ 126.8 San Miguel County $ 2.6 $ 7.7
Otero County $ 61.4 $ 97.3 Kiowa County $ 2.4 $ 10.8
Eagle County $ 42.1 $ 153.1 Lincoln County $ 2.0 $ 7.0
Teller County $ 41.2 $ 76.3 Crowley County $ 1.9 $ 3.2
Montrose County $ 36.2 $ 84.3 Ouray County $ 1.7 $ 7.1
Saguache County $ 30.3 $38.9 Washington County $ 1.7 $ 3.3
Summit County $ 30.3 $ 107.3 Phillips County $ 0.9 $ 3.2
Delta County $ 27.3 $ 64.1 Conejos County $ 0.6 $ 1.1
Morgan County $ 25.4 $ 94.0 San Juan County $ 0.6 $ 2.7
Logan County $ 24.0 $ 82.1 Hinsdale County $ 0.6 $ 2.8
La Plata County $ 21.6 $69.4 Baca County $ 0.5 $ 0.9
Routt County $ 20.9 $ 78.7 Dolores County $0.4 $ 0.7
Las Animas County $ 17.3 $ 52.6 Jackson County $ 0.2 $ 0.7
Prowers County $ 13.6 $ 20.5 Sedgwick County $ 0.05 $ 0.04
Gunnison County $ 12.7 $ 45.7 Cheyenne County $ 0.0 $ 0.0
Custer County $ 11.8 $ 20.4 Costilla County $ 0.0 $ 0.0
Elbert County $ 11.6 $ 15.3 Mineral County $ 0.0 $ 0.0

Figure 11 shows the cost of crime per resident in each county. Saguache County, with a population of 6,559, has the highest, per resident, cost of police-reported crime at $4,618 across 200 crimes. The next highest, per resident, cost of police-reported cost is Adams County at $4,345 (population: 524,062) across 76,864 crimes. Adams County has the highest total crime cost, per resident, at $10,243.

Figure 11 – Per-resident Cost of Crime by County

Per-resident Cost of Crime by County, Sorted by All Crime in 2020 Dollars
County All Police Reported Crime All Crime CO Total Crime County All Police-reported Crime All Crime CO Total Crime
Colorado $1,869  $4,627
Adams County $4,345 $10,243 Gunnison County $720 $2,595
Pueblo County $3,703 $8,176 Douglas County $848 $2,588
Denver County $3,362 $7,585 Delta County $852 $1,997
Alamosa County $3,778 $7,576 Montrose County $833 $1,937
Kiowa County $1,641 $7,404 Moffat County $811 $1,890
Saguache County $4,618 $5,925 Kit Carson County $657 $1,828
Montezuma County $2,636 $5,639 Yuma County $398 $1,721
Bent County $1,416 $5,497 Prowers County $1,132 $1,711
Otero County $3,317 $5,253 Pitkin County $550 $1,681
Garfield County $1,733 $5,138 Huerfano County $503 $1,530
El Paso County $1,962 $5,012 Archuleta County $492 $1,413
Boulder County $1,712 $4,774 Arapahoe County $595 $1,411
Mesa County $1,535 $4,400 Grand County $349 $1,364
Gilpin County $1,626 $4,216 Ouray County $322 $1,356
Logan County $1,119 $3,823 Rio Blanco County $414 $1,310
Custer County $2,184 $3,771 Lincoln County $358 $1,228
Hinsdale County $744 $3,660 La Plata County $380 $1,220
Weld County $1,389 $3,620 Chaffee County $344 $1,074
San Juan County $808 $3,605 San Miguel County $319 $945
Las Animas County $1,176 $3,578 Park County $244 $734
Lake County $759 $3,563 Phillips County $200 $718
Jefferson County $1,379 $3,537 Washington County $340 $671
Summit County $980 $3,473 Jackson County $161 $548
Larimer County $1,171 $3,403 Elbert County $412 $545
Morgan County $877 $3,249 Crowley County $304 $520
Broomfield County $1,199 $3,234 Dolores County $158 $304
Routt County $825 $3,107 Baca County $146 $258
Teller County $1,639 $3,035 Conejos County $79 $142
Clear Creek County $872 $3,018 Sedgwick County $21 $17
Fremont County $1,491 $2,985 Cheyenne County - -
Rio Grande County $915 $2,865 Costilla County - -
Eagle County $754 $2,745 Mineral County - -

Economic Impact of Crime

Although the cost of all Colorado crime in 2022 was $27 billion, that amount does not describe the totality of crime’s economic impact in the state. There is a large body of research concerning the connection between crime and the economy that has produced widely varying results. Mincer (1981) showed that acquired abilities of individuals are the ones which have an impact on economic growth. Together with an increase in physical capital, they create the framework of the aggregate production function, and yield higher economic growth.[iv] An economy that attracts and maintains its human capital stock and encourages investment in physical capital (businesses, factories, infrastructure, universities and so on) will have higher economic growth if its crime rate is under control. High crime rates can discourage businesses and citizens, leading them to relocate to areas that they perceive are safer. This phenomenon has been demonstrated repeatedly here in the United States. Many crime-ridden city centers have deteriorating local economies. St. Louis, San Francisco, Portland (Oregon), and Seattle are prime examples. For instance, as crime increased, since 2019, based on publicly available data on businesses filing changes of address with the U.S. Postal Service, 2,692 businesses in downtown Portland’s have left the area’s five zip codes.[v] In San Francisco, out of 203 retailers that were open in 2019, only 107 are still operating in the downtown area.[vi] There is a statewide industry that manages crime including the criminal justice system, public defenders, the Department of Corrections, and communities and businesses that provide services to prisons, jails, and detention centers. In order to evaluate the benefits of reducing crime, it is necessary to look at the economic benefits that this industry provides to the economy. The difficulty of determining the net economic impact of reducing crime can best be illustrated by the following scenario. Hypothetically, it is assumed that resources are put into effect that reduce crime to zero and the correctional population (prison and jails) becomes zero. Some of the benefits of this are: 1) Former prisoners are released and they re-enter the labor force and increase gross income in the economy. 2) The prisons and jails are closed, so the cost of maintenance and upkeep is reduced to zero and the facilities can be repurposed. 3) Government budgets targeting crime prevention and policing can be spent in other areas like infrastructure or education and/or taxes can be lowered. Some of its detriments are: 1) disemployment of the police, prison guards, parole officers, lawyers, district attorneys, bail bondsmen, etc., who may have to be retrained and educated or may never be gainfully employed again. 2) Closures of prisons and jails currently serving as major employers in the community will cause a decrease in demand for services that support the operations and the workers who are employed at the facilities. CSI regularly utilizes the REMI PI+ dynamic economic model to assess the economic impact of policy initiatives, changes to tax law, economic subsidies, and the like. It was used for this report to examine the impact of reducing crime to zero: the economic cost of the prison population vanishing alongside the economic benefits of restoring crime’s $19.3 billion of quality-of-life costs to the state and reducing insurance premiums by 25%. The impacts of these three components are presented separately and in combination.

Incarcerated Population Becomes Zero

According to the Prison Policy Initiative, there are 15,865 inmates in state prisons, 1,681 in federal prisons, 12,710 in local jails, 49 in Indian jails, and 753 in juvenile facilities (a total of 31,058 inmates) in Colorado. In the REMI model, there is a policy variable called “Prison Population.” Changing this variable affects the stock of incarcerated people in state, federal, and local jails. Reducing Colorado’s prison population by 31,058 has the following economic impact: employment decreThe impact on individual industries is shown in Figure 12. The services sector experiences the largest decrease in jobs followed by state and local government, construction, and retail/wholesale trade.

Figure 12 – Employment Impact of Zero Prison Population

Employment Impact of Zero Prison Population
Industry Change in Jobs
All Industries -10,335
Natural Resources -49
Construction -1,689
Manufacturing -253
Retail and Wholesale -1,330
Transportation and Public Utilities -280
Services -4,635
State and Local Government -2,100

Cost of Crime Related to Quality of Life Decreases to Zero

The largest component of the total cost of crime is quality–of-life cost (totaling $19.25 billion). In REMI, the policy variable “Non-pecuniary (Amenity) Aspects” represents a quality-of-life measure; an area with a positive amenity is considered to have a high quality of life rating relative to the nation. Quality of life refers to things like weather, air quality, crime rates, etc.— attractiveness of an area not explained by economic costs. An amenity increase perceived as a real compensation gain makes a region more attractive, so a greater number of economic migrants enter the region. The economic impact of a $19.25 billion increase in quality of life (because crime has vanished) results in an increase of 17,335 jobs and a $1.8 billion increase in GDP. Figure 13 shows the employment impacts in the Denver metro region and the rest of Colorado by industry. The Denver metro area realizes 61% of the employment increase.

Figure 13 – Economic Impact of the Cost of Quality of Life Due to Zero Crime

Employment Impact of Increase in the Quality of Life Due to Zero Crime
Industry Denver Metro Rest of Colorado Statewide
All Industries 10,508 6,827 17,335
Natural Resources 62 37 99
Construction 1,533 1,102 2,635
Manufacturing 288 161 449
Retail and Wholesale 1,066 754 1,820
Transportation and Public Utilities 397 149 546
Services 4,726 2,734 7,460
State and Local Government 2,437 1,889 4,326
 

Impact of Decreased Insurance Premium Related to Tangible Cost of Crime Becoming Zero

The primary assumptions of CSI’s insurance premium modeling are that $7.85 billion of tangible crime is reported to the insurance industry and that insurance companies respond by increasing premiums by 25% of what they would be otherwise. There is support for these assumptions: the Colorado Department of Insurance reported that, from January 2019 to December [viii] Premiums would increase by $1.96 billion to cover the submitted claims of about $295 per Coloradan. If crime were to vanish, however, this would leave an additional $1.71 billion more in consumers’ pockets to spend. In this scenario, consumer spending is increased by $1.96 billion and the price of insurance decreases by 25%. The impact on employment is an increase of 40,445 , and the GDP impact is an increase of $4.97 billion. Figure 14 shows the employment impact by industry and region.

Figure 14 – Employment Impact of a 25% Decrease of Insurance Premiums

Employment Impact of a 25% Decrease of Insurance Premiums
Industry Denver Metro Rest of Colorado Statewide
All Industries 28,853 11,592 40,445
Natural Resources 138 78 216
Construction 4,264 2,038 6,302
Manufacturing 666  283 949
Retail and Wholesale 3,205 1,499 4,704
Transportation and Public Utilities 895 233 1,128
Services 18,421 6,782 25,203
State and Local Government 1,274           670 1,944
 

Combined Impact of Zero Cost of Crime

Combining the three previous scenarios and modeling the impact of crime decreasing to zero produces the following results: Employment increases by 47,319 and GDP increases by $5.62 billion. Figure 15 shows the employment impact by industry.

Figure 15 – Total Employment Impact of Crime Decreasing to Zero

Combined Impact of Crime Decreasing to Zero
Industry Denver Metro Rest of Colorado Statewide
All Industries 35,524 11,795 47,319
Natural Resources 176 90 266
Construction 5,239 1,999 7,238
Manufacturing 837 305 1,142
Retail and Wholesale 3,796 1,378 5,174
Transportation and Public Utilities 1,139 251 1,390
Services 21,215 6,727 27,942
State and Local Government 3,122 1,045 4,167
 

Crime in the First Half of 2023

There has been a lot of media attention to crime this year. There are claims that Colorado may be experiencing a “summer of violence” similar to that of 1993.[ix] As Figure 16 demonstrates, however, the crime rate per 100,000 in the first five months of the year is much lower than it was in 2021 and 2022.

Figure 16 – Total Crime Rate (per 100,000)

The claim that this summer is trending to be worse than 1993 for violent crime is based solely on murders. Figure 17 shows the crime rate against persons per 100,000, which was much higher this May than it was in the previous three years.

Figure 17 – Crime against Persons (Crime Rate per 100,000)

Focusing on one type of violent crime is misleading. The good news is that, in 2023 through May, the violent crime rate was lower than it was in 2021 and 2022 and lately has been trending lower than it was in 2020 (see Figure 18).

Figure 18 – Violent Crime (Crime Rate per 100,000)

Figure 19 shows the rate of crime against property, which, in 2023, has been lower than it was in 2021 and 2022 and may end lower than it was in 2020. This is primarily due to a drop in motor vehicle thefts. The net result is that, with the exception of murder, the drivers of the cost of crime are trending downward. If this continues for the remainder of the year, the total cost of crime will be lower than it was in the previous three years.

Figure 19 – Crimes against Property (Crime Rate per 100,000)

Concluding Remarks

Despite the high collective value of the many businesses and services that comprise the industry dedicated to crime management in Colorado, the cost of crime as a whole is far greater. Determining the value of a total reduction in crime, though unrealistic, illustrates the enormous burden crime imposes on our economy and citizens. The goal of policymakers who want to see Colorado thrive should be to take immediate steps to reduce crime. There are massive economic benefits to all Coloradans when crime is low. Policy,  despite its intention to create a more humane criminal justice system, has instead adversely affected the quality of life enjoyed by the state’s law-abiding majority. Victims should be prioritized, not perpetrators. It is time for legislators and leaders to act to reverse current trends, recognize the need to punish illegal behavior, and impose strong penalties on criminals at all levels of crime. Failure to do so will only cause Colorado to become a less attractive location for people and businesses.

Appendix

Figure 20 – Crime Concentration by Type of Crime by County
Crime Concentration by County
All Offense Types Crime against Persons Crimes against Property Crimes against Society All Offense Types Crimes against Persons Crimes against Property Crimes against Society
Colorado 100% 100% 100% 100% Lake 17% 37% 13% 8%
Adams 214% 225% 215% 200% La Plata 29% 39% 26% 36%
Alamosa 153% 181% 146% 158% Larimer 80% 73% 79% 113%
Arapahoe 48% 40% 52% 33% Las Animas 93% 109% 86% 95%
Archuleta 29% 66% 20% 36% Lincoln 28% 42% 25% 20%
Baca 11% 28% 2% 49% Logan 69% 81% 62% 123%
Bent 64% 91% 59% 30% Mesa 84% 114% 72% 150%
Boulder 81% 91% 81% 73% Mineral 0% 0% 0% 0%
Broomfield 73% 44% 77% 108% Moffat 69% 111% 45% 200%
Chaffee 26% 33% 22% 41% Montezuma 76% 147% 59% 55%
Cheyenne 0% 0% 0% 0% Montrose 60% 67% 54% 105%
Clear Creek 64% 85% 60% 45% Morgan 57% 77% 55% 52%
Conejos 8% 13% 8% 0% Otero 77% 89% 76% 32%
Costilla 0% 0% 0% 0% Ouray 23% 42% 22% 7%
Crowley 34% 42% 26% 104% Park 18% 44% 11% 14%
Custer 43% 62% 39% 57% Phillips 6% 20% 4% 9%
Delta 60% 59% 59% 76% Pitkin 51% 55% 54% 12%
Denver 190% 164% 193% 157% Prowers 35% 42% 32% 48%
Dolores 32% 24% 33% 39% Pueblo 143% 154% 149% 75%
Douglas 43% 43% 42% 57% Rio Blanco 23% 48% 20% 21%
Eagle 45% 71% 42% 27% Rio Grande 79% 116% 71% 71%
Elbert 7% 14% 5% 6% Routt 59% 84% 52% 83%
El Paso 85% 93% 86% 78% Saguache 49% 54% 45% 77%
Fremont 54% 89% 47% 47% San Juan 28% 39% 21% 51%
Garfield 55% 86% 45% 90% San Miguel 26% 35% 21% 41%
Gilpin 197% 125% 203% 343% Sedgwick 5% 0% 7% 0%
Grand 21% 24% 19% 21% Summit 74% 96% 70% 61%
Gunnison 47% 66% 40% 65% Teller 54% 73% 46% 90%
Hinsdale 25% 39% 24% 0% Washington 54% 68% 52% 32%
Huerfano 41% 35% 41% 39% Weld 71% 75% 69% 81%
Jackson 20% 22% 22% 0% Yuma 17% 27% 15% 16%
Jefferson 107% 90% 109% 138%
Kiowa 76% 54% 57% 241%
Kit Carson 58% 71% 42% 167%

[i] Shapiro, R.J,. Hassett, K. A., “The Economic Benefits of Reducing Violent Crime, A Case Study of 8 American cities.” Center for American Progress, June 2012.

[ii] Miller. T.R., Cohen, M.A., Swedler, D.I., Ali, B., and Hendrie, D.V. Journal of Cost-Benefit Analysis, Volume 12, Issue 1, Spring 2021, pp.24-54

[iii] Colorado Crime Statistics (state.co.us)

[iv] Mincer, J. (1981). Human Capital and Economic Growth. NBER Working Paper Series #803, 1-25.

[v] https://www.dailymail.co.uk/news/article-11807717/Portland-business-owners-say-theyre-fleeing-city-en-masse-crime.html

[vi] https://www.dailymail.co.uk/news/article-12101001/Crime-ridden-San-Francisco-lost-HALF-downtown-stores-COVID-hit-95-shuttering.html

[vii] Homeowner Availability Study -Colorado Department of  Regulatory Agencies (DORA) – Division of Insurance, Prepared by Oliver Wyman,

[viii] https://www.valuepenguin.com/average-cost-of-health-insurance

[ix] Is a new 'Summer of Violence' brewing in Metro Denver? | Subscriber Content | denvergazette.com                                                

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