Crime and the Minnesota Economy Revisited: Brace for Property Crime Surge

At about the same time Smart Politics posited the question as to what effect, if any, the rising unemployment rate and economic downturn would have on the state’s violent crime rate, Minneapolis Mayor R.T. Rybak’s office issued a press release documenting how violent crime has declined in every Minneapolis precinct since 2007, has dropped 13 percent citywide thus far in 2008, and is down 24 percent compared to 2006.

In the release, the Mayor suggested, however, that the economic woes and budget deficit currently faced by Minnesota might be a predecessor for this trend to backtrack, and for violent crime to rise again:

“While we are pleased with this continued progress, we know that, with the current economy and state budget deficit, tougher times are around the corner. We need to keep our eye on the ball and keep public safety as our central focus.�? (Minneapolis Crime Falls for 2nd Year in a Row, 12/22/08)

While historical data statewide (documented by Smart Politics earlier in the week) does not indicate there to be a positive association between economic indicators and violent crime, the same cannot be said for property crimes (burglary, larceny/theft, and vehicle theft).

Smart Politics conducted a bivariate correlation of trends in Minnesota’s gross domestic product and the property crime rate and found, not surprisingly, these variables are negatively related (-.837, significant at the .01 level). In other words, greater increases in gross domestic product are associated with greater decreases in the property crime rate in statewide. The “near zero growth rate�? in the Minnesota economy projected by Pawlenty’s finance team would thus suggest a surge in property crimes is also on the horizon.

Smart Politics also conducted a linear regression analysis, using Minnesota’s yearly Gross Domestic Product as the independent variable and yearly property crime rate as the dependent variable. The results, using yearly data going back to 1976, show an increase of one million dollars in gross domestic product causes a drop in the property crime rate of .006 incidents per 100,000 people. Seventy percent (R Square = .700) of the variation in property crime in this model is explained by changes in GDP. The model as a whole is highly significant (at the .001 level).

Now, a drop of just .006 property crime incidents per 100,000 people does not sound like a large drop at all, until one examines the scope of Minnesota’s GDP. At over $250 billion dollars per year, the Gopher State’s GDP would make it the 28th largest in the world if it were a country (about the size of Norway’s GDP).

For example, from 2006 to 2007, the state GDP increased by 12.875 billion dollars. That means since an increase of GDP of one million dollars causes a .006 incident drop in the property crime rate, a 12.876 billion dollar increase would cause a drop of 77 property crime incidents per 100,000 people. This is not a trivial amount, as the average increase or decline in property crimes during this 30+-year period was just 166 incidents per 100,000 people.

There are, of course, many more factors than simply the state of the economy and GDP that contribute to the rise (and fall) of property crime rates. But, in general, an amended version of Mayor Rybak’s comments that a surge in property crime rates could befall the city during the current economic crisis is right on target.

Minnesota Property Crime and GDP, 1976-2007

Year	Property Crime rate	Gross Domestic Product
2007	3,036.6	254,970
2006	3,079.5	242,095
2005	3,087.8	232,001
2004	3,041.6	223,454
2003	3,113.3	208,179
2002	3,264.3	198,558
2001	3,311.2	190,231
2000	3,207.6	185,093
1999	3,323.6	172,874
1998	3,736.3	164,897
1997	4,076.1	155,938
1996	4,124.3	141,664
1995	4,141.2	131,357
1994	3,982.0	124,733
1993	4,059.0	114,946
1992	4,252.7	111,919
1991	4,180.2	103,791
1990	4,232.7	100,327
1989	4,094.9	96,165
1988	4,024.7	89,991
1987	4,330.4	83,947
1986	4,077.6	78,194
1985	3,877.8	74,808
1984	3,630.0	70,296
1983	3,843.3	61,029
1982	4,235.4	56,952
1981	4,508.2	54,966
1980	4,571.7	49,717
1979	4,171.8	46,353
1978	3,954.5	41,126
1977	4,037.0	36,380
1976	4,142.1	32,610

Minnesota Property Crime Index: rates Per 100,000 inhabitants (Source: FBI Uniform Crime Reports).
Minnesota Gross Domestic Product: in millions of current dollars, all industries total (Source: Bureau of Economic Analysis, U.S. Department of Commerce)