The economic value of crime prevention in the City of Vancouver

Abstract

This is the first study to use the crime-housing price relationship to attempt to measure the economic cost of crime within a Canadian context. The City of Vancouver, which is home to Canada’s hottest real estate market, is used as an area of study. Crime data is obtained from the Vancouver Police Department and the Real Estate Board of Greater Vancouver for a period of nine years (2005-2013). Geographic Information System (GIS) software is then used to redefine the boundaries in order to make the datasets comparable and ultimately construct a unique panel dataset of twenty-two neighbourhoods. This study also proposes a methodology to handle the issue of endogeneity using instrumental variables that may be successfully applied despite the limited neighbourhood-level data that is available in Canada. Once endogeneity is remedied, unbiased coefficients can be obtained, which will make it possible to calculate the economic cost of crime, and thus the value of crime prevention for the City of Vancouver.