PRESS RELEASE

Crime Costs Nova Scotians $1.2 Billion a Year

Stop Counting Crime Costs as Contribution to Prosperity, Study Recommends

April 1999, Halifax, Nova Scotia—GPI Atlantic, a non-profit research group, today released the first comprehensive study of the economic costs of crime in Nova Scotia, and the first in Canada that examines changes in these costs over time. The report challenges the current practice of counting crime costs as a contribution to economic prosperity and well being, as is done in measures of progress based on the Gross Domestic Product (GDP).

The study is the third release of data for the Nova Scotia Genuine Progress Index (GPI), which will integrate 20 social, economic and environmental indicators into a comprehensive measure of sustainable development for the province. The work is seen as a step towards "full cost accounting" and has been designated by Statistics Canada as a pilot project for Canada. The first two components of the GPI, on the value of voluntary work and the value of unpaid household work and child care, were released late last year and measured social assets not counted in the GDP.

Higher crime rates make the GDP grow because they produce more spending on prisons, police, court trials, burglar alarms and security guards, all of which make the economy grow and are counted as contributions to economic prosperity. By contrast, the GPI sees crime costs as a loss rather than a gain. Unlike the GDP, higher crime rates make the GPI go down. Lower crime costs are seen in the GPI as cost savings which can be invested in more productive activities that contribute to well being.

While measures of progress based on the GDP assume that all economic growth contributes to prosperity, the GPI regards limits to growth in crime, pollution, sickness, road accidents, natural resource depletion, gambling and other potential liabilities as more indicative of progress than unlimited growth. This approach holds true for the fourth GPI data release next month, on the cost of greenhouse gas emissions in Nova Scotia. Like crime, lower emissions are seen as a sign of progress.

The GPI crime report has been reviewed and received feedback from Hans Messinger, Director of Industry Measures at Statistics Canada, from analysts at the Canadian Centre for Justice Statistics and the Nova Scotia Department of Justice, and from independent researchers, particularly Dr. Don Clairmont, criminologist, in the Department of Sociology at Dalhousie University. Initial funding for the Nova Scotia GPI has come from the N.S. Department of Economic Development and Tourism and A.C.O.A. under the Canada-Nova Scotia Cooperation Agreement on Economic Diversification.

The GPI Atlantic study found that:
Crime costs Nova Scotians an estimated $550 million a year in economic losses to victims; public spending on police, courts and prisons; and private spending on burglar alarms, security guards, electronic surveillance and theft insurance. This amounted to $600 per person, or $1,650 per household in 1997.

When losses due to unreported crimes, insurance fraud and shoplifting are added, as well as the costs of shattered lives due to crime, as estimated from court awards, the loss was nearly $1.2 billion a year, or $1,250 per person ($3,500 per household). These crime costs amount to 6.3% of the provincial GDP. These costs do not include deaths, injuries and property damage due to impaired driving; non-hospital medical costs; private spending on criminal lawyers; and a variety of other costs.

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 Nova Scotia households an additional $200 a year in higher premiums.

Nova Scotia crime costs are lower than the Canadian average due to a property crime rate that is 82% of the national average, a serious violent crime rate that is 63% of the national average, and a robbery and motor vehicle theft rate less than half the Canadian average. The province also has the lowest incarceration rate in Canada. Nova Scotia imprisons out of every 1,600 citizens, compared to one out of 900 in Canada, and one out of 150 in the U.S.A. Nova Scotia has one-sixth the crime rate for serious violent crimes as the U.S.

Nova Scotia’s comparative advantage in crime cost savings is gradually eroding. Nova Scotia’s property crime rate has climbed from 60% of the Canadian rate in 1972 to 72% in 1982, to 82% in 1997. For all criminal code violations, Nova Scotia has jumped from less than two-thirds the national crime rate 25 years ago to 98% today, though most of the increase in violent crime has been for common assaults rather than serious crimes.

According to the official crime statistics, Nova Scotians today are four times as likely to be victims of crime as their parents a generation ago. Crime rates have climbed steadily since 1962, peaking in 1991, and falling by 16% since then. According to the most recent victimization surveys, Nova Scotians have a one-in-ten chance of being a crime victim in 1999, compared to a one-in-six chance eight years ago. Higher crime translates into higher costs, higher prices and higher taxes. If crime were still at 1962 levels, Nova Scotians would be saving about $750 million a year or $2,200 per household, money that would be available for investment in more productive and welfare-enhancing activities.

Across the country crime is highly correlated with unemployment rates. Crime rates peaked during the recessions of the early 1980s and early 1990s as unemployment rates hit all-time highs. Only 22% of Nova Scotia prison inmates had full-time jobs at the time of admission, and fully 58% were unemployed.

The Cost of Crime in Nova Scotia (summary 12 pages) 44K PDF

The Cost of Crime in Nova Scotia (full report 223 pages) 5.6MB PDF