At one level this is merely a detail of mild interest – when gold prices rise then so do burglary rates upon Asian households. The reason being that Asian households show a cultural – no, not racial – preference for holding a certain portion of household assets in physical gold. Criminals are rational in that they heed Willy Sutton’s advice about robbing banks – that’s where the money is.
There is though a further level of this. If criminals are rational then we have at least the basic philosophic starting point to be able to combat crime. Because rational behaviour can be manipulated.
The finding itself is here:
RATIONAL CRIMINALS: When the price of gold rises, burglars target UK neighbourhoods with more Asian families
When the price of gold goes up, burglars become more active in UK neighbourhoods with a greater share of Asian families. That is the central finding of research by Nils Braakmann, Arnaud Chevalier and Tanya Wilson, to be presented at the Royal Economic Society’s annual conference at the University of Warwick in April 2019. Their study notes British Crime Survey evidence that Asian households have stronger preferences than others for holding gold, mostly in the form of jewellery. Analysing detailed crime data, the researchers show that an increase in the price of gold by £100 leads to a 1% surge in burglaries in neighbourhoods with a greater share of Asian households. In neighbourhoods with the 10% highest share of Asian households, which can therefore be more clearly identified as Asian neighbourhoods by burglars, the effect is almost three times larger.
The study starts from a fundamental question in the economics of crime: are criminals rational? In his groundbreaking theory of 1968, Nobel laureate Gary Becker rationalised the behaviour of criminals, and highlighted that individuals engage in crime only if the returns, adjusted for the risk of apprehension, are greater than the returns from engaging in legal activities. This research provides an innovative way of testing this analysis using variation in the financial returns to committing crime. Testing Becker’s model has proved difficult as variation in criminal activity tends to affect the return to crime. For example, when more phones are stolen, the retail value of stolen phones drops.
Instead, the researchers rely on variations in the price of gold and assess how this affects burglary in England and Wales. Since the gold price is set on international markets, it is unlikely to vary with the behaviour of burglars in England and Wales. These price variations are thus akin to an experiment where the returns to criminal activity vary independently of the burglars’ activity. The researchers’ hindsight is that different communities in the UK have different preferences for holding gold, mostly in the form of jewellery. Anecdotal evidence, supported by the British Crime Survey, suggests that Asian households are more likely to have gold assets. Thus, when the price of gold goes up, the returns to burglary of an Asian household increases and it would be expected that rational burglars target these households.
Not hindsight but insight there. Still, a fun piece of research.
As to the why of the gold preference, that is widespread on the subcontinent. And that’s the source of “Asian” in English English, we mean from India, Pakistan and Bangladesh, not East Asians as might be true in other variants of English. The family wealth often is concentrated into the wife’s jewelry. A little bit of gold is decorative, obviously enough. It’s easily turned into cash by pawning or outright sale in bad economic times. And in the absence of any form of bank savings network out in the villages – and the standard inflation rates which affect any cash holdings – why not use this as the savings mechanism?
Leading, of course, to adornment with gold being evidence of social status through having savings. Thus that cultural preference here.
The deeper point being as the researchers point out. If criminals are rational then fighting crime becomes as Becker pointed out. The dissuasive effect of laws against crime become the chance of being caught times the punishment if caught. The expected punishment that is.
A 7 day sentence with a 100% chance of being caught has the same dissuasive effect as a 700 day sentence with a 1% chance.
Well, OK, maybe not quite, as humans are subject to hyperbolic discounting but that’s the basic idea. Meaning we do actually have the template for reducing crime. Get the police to concentrate upon actually catching criminals – rather than, say, oppressing Twitterati – and we’ll get the crime rate down. But then that’s science and who the hell is going to use that in politics?