Violent crime linked to wealth gap in richest countries

• Rising levels of overall wealth, or economic growth, within a nation are beneficial for society as a whole, but only when accompanied by equitable income distribution.
• Researchers analyzed data on homicide and gross domestic product in 36 of the world's wealthiest countries.
• An increase in GDP reduces homicide rates when the initial GDP is low, but the opposite effect is observed in contexts with high pre-existing GDP.

In an analysis of economic and lethal crime data from 36 of the world’s wealthiest countries over an 18-year period, researchers in Sweden and Brazil showed a strong link between income inequality and increasing violence. The study also demonstrated how income growth alone does not reduce crime.

What they found were some surprising dynamics. The results show increases in income do not have a sustained effect on crime reduction. In fact, after a certain point further income increases can lead to more crime, says Vania Ceccato, a researcher on crime and the built environment at KTH Royal Institute of Technology in Stockholm.

“The relationship between gross domestic product and crime is not as straightforward as one would expect,” Ceccato says.

Crime and GDP

In the 36 countries studied, a decrease in crime coincided with an increase in GDP when the society’s initial GDP was low. But the opposite effect was seen in countries with high pre-existing GDP. The researchers used homicide data as a proxy for violent crime because homicides, unlike other violent offenses, are not underreported.

A rise in income inequality leads to a much larger increase in homicide rates than the decrease resulting from economic growth, says the study’s co-author, Temidayo James Aransiola, a research economist at Brazil’s State University of Campinas whose research on the subject began as a visiting scholar at KTH.

Increased GDP coincided with reduced violent crime in Iceland, Estonia, Latvia, Lithuania, Slovenia, Luxembourg, Slovak Republic, Hungary, New Zealand, Czech Republic, Chile, Portugal, Ireland, Greece, Finland and Israel.

However, violent crime rates increased along with GDP in Denmark, Norway, Austria, Poland, Belgium, Sweden, Switzerland, Turkey, Netherlands, Mexico, Canada, Italy, France, Britain, Germany, Japan and the U.S.

Crime and income inequality

While economic expansion can reduce violent crime in poorer countries, it can increase crime in wealthier ones when income inequality is factored in, says the study’s co-author, Aransiola says.

Economic growth does the most to lower crime in countries with high inequality, where there’s more room for improvement, he says.

“In fact, income inequality not only raises homicide rates but also changes how effective economic growth is at reducing crime,” Aransiola says. ”In practice, this means if equality were achieved at the national level, interventions combating lethal violence at the local level would have a better chance of success.”

Aransiola cautions that the results regarding any single country cannot be interpreted in isolation. Sweden, for example, is grouped with those countries where an increase in GDP coincides with a higher homicide rate – rather than with countries where GDP reduces homicides. 

“Even so Sweden is in a good position, where the effect of GDP on homicide is minimal, compared to Canada, France, or Germany,” he says.  

Read the full study at https://doi.org/10.1108/ECON-10-2023-0163