ABSTRACT

The Cost of Crime in Nova Scotia

Despite the suffering caused by crime, and despite its costs both to the economy and to our quality of life, higher rates of crime actually fuel economic growth. Because the Gross Domestic Product (GDP) simply adds up all economic activity and is currently used as our primary measure of progress, increased spending on prisons, police, courts, burglar alarms and security systems is perversely counted as a contribution to our well-being and prosperity.

The same is true for gambling, toxic pollution, sickness, divorce, accidents, smoking, and natural resource depletion, all of which make the GDP grow. Because the GDP makes no distinction between economic activities that create benefit and those that cause harm, its misuse as a measure of progress means that "more" is always regarded as "better," thereby sending misleading signals to policy makers.

One of the fastest growing sectors of the booming U.S. economy is imprisonment, growing at an annual rate of 6.2% throughout the 1990s. Two million Americans, one out of every 140 citizens, are now behind bars, more than any other country in the world. The security industry alone contributes $50 billion a year to the U.S. economy, with schools now the biggest customers, after a growth spurt fuelled by the Oklahoma City explosion and the Columbine High School massacre. The O.J. Simpson trial alone added $200 million to the U.S. GDP. Is this type of growth a sign of a healthy economy and society?

Because Nova Scotia imprisons people at just one-twelfth the rate of the U.S.A., because it has just one-sixth the rate of serious violent crimes, and because it spends so much less on prisons and security systems, its GDP grows more slowly, -- an economic and social deficit according to our current measures of progress.

By contrast, the Genuine Progress Index (GPI) counts the costs of crime as a loss and a liability. It explicitly values a peaceful and secure society as a valuable social asset, and regards higher crime rates as signifying a deterioration or depreciation of that social capital. Unlike the GDP, lower crime rates make the GPI go up. Reduced crime costs are regarded as savings that can be invested in more productive and welfare-enhancing activities. In the GPI, "less" is often "better, " with limits to growth in crime, pollution and other liabilities more indicative of progress than blind unlimited growth.

The GPI Cost of Crime study, the most comprehensive of its kind to date, finds that crime costs Nova Scotians $1.2 billion a year, or $3,500 per household, equal to 6.3% of provincial GDP. This includes $550 million a year in economic losses to victims; public spending on police, courts and prisons; and private spending on burglar alarms, security guards and theft insurance. The average Nova Scotia household pays $800 more per year in higher prices, 2.6% of annual consumption expenditures, due to in-store retail theft and crime prevention equipment. Insurance fraud costs households an additional $200 a year in higher premiums. Data sources and detailed methodologies for all costs are included.