One of the less obvious effects that crime has on society is the tremendous financial burden it places on both individuals and government. Efforts to more accurately quantify the specific financial costs associated to crime have produced a variety of results; however, one common theme resonates. Both the tangible and intangible costs of crime are placing a severe encumbrance on society and misappropriating significant resources that could otherwise be directed toward more productive endeavors.
The politics of crime tend to focus on the costs directly associated to the criminal justice system, e.g. the police, courts, and corrections system. While these costs are significant and often comprise a large portion of any given jurisdiction's budget, the money allocated toward the criminal justice system should be viewed relative to the costs associated to the perpetuation of crime itself. Several studies have argued that the intangible costs emanating from crime far outweigh the formal costs linked to controlling it.
Intangible costs associated to crime are often difficult to quantify; however it is not difficult to imagine the long term effect that psychological trauma or a reduced quality of life have on victims of crime. Upwards of 5 million Americans are estimated to receive mental health therapy directly related to their victimization. This represents a significant financial cost in both real terms as well as in estimates of reduced individual productivity. The trauma associated to criminal victimization often leads to troubled personal and professional relationships and can limit the anticipated earnings an individual might expect to produce throughout their lifetime. Recognizing the reduction in lost opportunity costs significantly increases the financial impact that crime places upon society.
Seeking to more accurately account for these hidden cost estimates, economist David Anderson provided a disquieting account of the financial impact of crime in his 1999 study The Aggregate Burden of Crime. Anderson estimated the cost of crime within the United States to be upwards of $1.7 trillion annually. His estimates far exceeded those of previous studies; however a closer examination of his methodology provides a useful insight into his conclusions.
Anderson's study included a comprehensive analysis of previously overlooked variables such as the aforementioned reduction in opportunity costs emanating from both the commission of crime as well as the victimization of crime. Often unrecognized are the potential earnings forecasts attributable to those serving time for criminal activity. Anderson estimated that each incarcerated inmate represented an annual productivity loss of over $23,000. Calculating lost opportunity costs coupled with the time and effort that individuals expend on securing their assets from crime, Anderson placed the annual loss from these variables alone at over $130 billion.
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