Following legalization, marijuana offenders become 4 to 5 percentage points more likely to re-enter prison within 9 months of release. The effect is sizable, corresponding to a near 50% increase from a baseline rate of 10 percent. When decomposed by crime categories, I find the overall increase masks two countervailing effects. One, marijuana offenders became less likely to commit future marijuana offenses. Two, this reduction is offset by the transition to the trafficking of other drugs. As a result, the observed criminality of former marijuana traffickers increased.However, that is definitely not the end of the story. I just read an article by Jeffrey Brinkman and David Mok-Lamme (both Federal Reserve Bank of Philadelphia), published in the journal Regional Science and Urban Economics (ungated earlier version here), where the conclusions seem to almost be the opposite. Brinkman and Mok-Lamme look at crime data at the census tract level in Denver, over the period from 2013 to 2016 (retail marijuana for recreational use became available in Colorado on 1 January 2014). They use an interesting identification strategy:
While the legalization of recreational marijuana in 2014 applied to the entire state, many municipalities within Colorado prohibit sales within their own jurisdictions. Residents living in municipalities near Denver that prohibit recreational sales often travel to Denver to purchase marijuana. Therefore, locations within Denver that have more access to demand from neighboring municipalities show more growth in their dispensary density, ceteris paribus. In addition, out-of-state tourists could purchase marijuana starting in 2014, further increasing the demand for dispensaries in locations with access to broader outside markets. In the empirical analysis, we use two geospatial variables to proxy for access to outside demand: a neighborhood’s proximity to municipal borders and proximity to major roads or highways. These variables are then used to instrument for changes in locations of dispensaries over time.I was initially sceptical of this, because areas close to the outer border of Denver are further from the central business district, and consequently suffer less crime. However, their supplementary analyses, including where they show that the effect is unique to the period after recreational marijuana became available, convinced me. They find that:
...an additional dispensary per 10,000 residents is associated with a reduction of 17 crimes per 10,000 residents per month. The average number of crimes per 10,000 residents in Denver is 90 per month, so an additional dispensary is associated with roughly a 19 percent decline in crime.The results from the supplementary analysis I mentioned (which is just one among many) suggest a smaller effect, on the order of 14 fewer crimes per 10,000 residents per month (a reduction of 16 percent). Some of their other results are interesting as well. For instance:
Dispensary densities after 2014 increased more in neighborhoods with higher poverty rates, with higher levels of employment, that are closer to the central business district, and where there is more useable land.To be honest, we see something similar with off-licence alcohol outlets. In my own work, we have reasoned that more outlets locate in poorer areas because rents are lower, and because poorer residents are unable to (or unable to afford to) travel long distances to obtain alcohol. The latter effect leads to markets that are much more localised in poorer areas.
That marijuana dispensaries tend to locate in poorer areas leads to perverse effects on the standard OLS (ordinary least squares) regression model, which shows that marijuana dispensaries are in areas with more crime, even controlling for poverty and other neighbourhood characteristics. That raises questions about a lot of the research linking off-licence alcohol outlets with crime, where similar effects might be at play.
Finally, coming back to the overall results, this research shows that marijuana legalisation is associated with lower crime. That is the opposite conclusion to the paper by Heyu Xiong I discussed last month. They use different data sources and cover different regions (Xiong had Oregon and Washington states in his analysis, as well as Colorado). This study was purely based on the urban area of Denver (although a supplementary analysis they report at the county level for all of Colorado was suggestive of a negative effect as well).
Brinkman and Mok-Lamme test for spatial spillovers into surrounding neighbourhoods, and don't find any. One explanation that might link both studies is if the spatial spillovers are wider than that. Perhaps, in addition to moving to harder drug crime, former marijuana dealers are forced to move to other areas as well? Certainly, there is more work to be done in this area.
[HT: Marginal Revolution, last August]
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