The Impact of Economic Activity on Criminal Behavior:
Evidence from the Fracking Boom
September 19, 2019
According to economic theory, crime should decrease as economic growth and opportunity improve. That’s because the incentive to engage in illegal activity decreases as legal avenues of earning income become more fruitful. However, there are documented cases where economic growth has led to higher crime rates. By looking at administrative level data in North Dakota, before, during, and after an economic expansion we are able to understand the nature and characteristics of higher crime rates in newly prosperous areas.
Instead of focusing on overall crime rates, author Brittany Street focuses on crimes committed by residents who lived in the area before the economic expansion began. This separates local crime impacts from those created by migrant workers when measuring the effect of economic opportunity on individual criminal behavior.
Crime initially decreases during the leasing period
This study finds that there is an initial twenty-two percent reduction in the number of criminal cases filed in areas affected by the fracking boom. The effects were most significant and most consistent for drug-related crimes. This reduction happens during the leasing period when mineral leases are signed and large-scale drilling activities have yet to begin.
The study’s author suggests that there are two different potential explanations for why crime rates would decrease during this initial phase:
- As their economic prospects improve, residents may become more engaged with legal activities rather than illegal activities.
- An improved economic outlook may reduce the desire to engage in illegal activities, as the cost (either real or perceived) of apprehension increases compared to legal activity.
Some crime returns during the production period
The author also finds that the initial reduction of crime among residents diminishes once drilling activities begin and production ramps up. Aggregate crime also increases during this period, which is consistent with the findings of other studies examining overall crime rate changes in relation to fracking booms. The author gives two potential reasons for this increase in crime: demographic changes or an increase in the number of bars and illegal markets. As the job market improves in an area, new people move in seeking better job opportunities. The in-migration of young men in particular—a historically crime-prone group—may contribute to an overall increase in crime.
The key policy implication of this work is that the fracking boom and accompanying economic growth in North Dakota led to a significant reduction in the amount of crime being committed by long-term local residents. Increases in crime rates in fracking areas are a potential symptom of migratory patterns that accompany economic booms, not the direct result of fracking itself. As a result, policymakers concerned about increasing crime related to economic growth should seek to understand not just aggregate impacts, but also impacts across various demographics. Understanding those differences may help in crafting more effective public policies.