Fall 2001; Volume 2, Number 2|
Feature: Violence and Healthcare
The Costs and Benefits of Reducing Gun ViolenceContinued
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Quantifying the Costs of Gun Violence: Willingness-to-Pay EstimatesOne of the standard methods for estimating the value of reductions in the risk of injury is to examine people’s marketplace behaviors. A number of studies have attempted to estimate the value that people place on the risk of workplace accidents by comparing the wage differences associated with jobs that have high versus low risks of injury (see for example Viscusi, 1992, 1993). This approach is impractical for estimating the costs of gun violence, in part because there are no good data available on the risks of gunshot injury for different occupations. And even if such data existed, isolating the effects of injury risks on wages from the effects of other job characteristics is quite difficult. In our view, the most promising approach for estimating what people would pay to reduce the volume of gun violence in society is to ask them directly. This “contingent valuation (CV)” approach attempts to infer people’s preferences towards non-market goods, such as improvements to health and safety by creating hypothetical market scenarios within the context of a social science survey. The CV method has a long tradition within the area of environmental economics, where analysts are regularly confronted with the difficult problem of valuing improvements to the environment. While contingent valuation remains somewhat controversial within the broader economics profession (see for example Hanemann, 1994 versus Diamond and Hausman, 1994), for the purposes of studying the costs of gun violence, the CV method is an improvement over its alternatives.
Our own contingent valuation estimates represent the first attempt to use this method to estimate the costs of crime. We rely on data from a nationally representative telephone survey of 1,200 American adults conducted in 1998 by the National Opinion Research Center (NORC) at the University of Chicago, one of the nation’s leading survey organizations. After a series of questions asking about their attitudes toward government and various current or proposed gun regulations, respondents were asked:
Suppose that you were asked to vote for or against a new program in your state to reduce gun thefts and illegal gun dealers. This program would make it more difficult for criminals and delinquents to obtain guns. It would reduce gun injuries by about 30 percent but taxes would have to be increased to pay for it. If it would cost you an extra [ $50 / $100 / $200 ] in annual taxes, would you vote for or against this new program?
The survey software randomly determines the size of the tax increase that the respondent is asked about, so that answers for each of the three dollar amounts are available for approximately one-third of the sample. Respondents are then asked a follow-up question where the dollar amount asked about in the initial referendum question is either doubled or halved, depending on whether the respondents initial answer was positive or negative, respectively.
The survey results suggest that a broad cross-section of the public is affected by gun violence, as evidenced by the substantial proportion of households who are willing to pay more in taxes each year to reduce gunshot injuries. Seventy-six percent of all respondents report that they would pay $50 more per year in taxes to reduce crime-related gunshot injuries by 30 percent, while 64 percent say they would pay $200 more in taxes. A formal statistical analysis suggests that the average American household would pay $239 more per year in taxes to fund such a program.
Given the total number of households in the U.S. equal to 102.5 million in 1998 (U.S. Bureau of the Census, 1999) we estimate that all households together are willing to pay $24.5 billion to reduce assault-related gunshot injuries by 30 percent. We can approximate the publics WTP to eliminate all crime-related gunshot injuries by multiplying the WTP for a 30 percent reduction by 3.33. The actual cost of a 100 percent reduction may exceed this approximation if some preventive behaviors are only eliminated in response to a complete elimination of gun violence (for example if airport metal detectors stay in place so long as there are any gun crimes). On the other hand, our approximation may be too low if the public derives diminishing marginal returns from additional reductions in gun violence. In any case, this approximation suggests that the value to society of eliminating crime-related gunshot injuries is approximately $82 billion.
Since these estimates come from survey responses about a hypothetical program, it is understandable to wonder whether they are meaningful in any way. Fortunately, several external benchmarks suggest that these survey responses are reasonable. First, the results of the NORC survey can be used to generate estimates of the value per statistical life saved, which turn out to be quite consistent with other estimates derived from analyzing actual marketplace data in other contexts (Viscusi, 1992, 1993). Secondly, the general pattern of responses to the gun survey are in accord with our expectations. For example, households with more income are more likely to vote in support of the intervention. Households with more children are also more likely to vote to reduce gun violence, presumably because such households experience a greater benefit from the intervention (in the form of risk reductions to household members) than those families with fewer members. Lastly, Anderson (1999) finds that the average household currently spends around $1,800 per year in taxes and consumption expenditures to fund the criminal justice system and private protective measures. Thus, it is implausible that the average household would spend an additional $239 per year to reduce the threat of gunshot injury by 30 percent, particularly since the fear of crime in America appears to be driven largely by the threat of violent crime (Zimring and Hawkins, 1997, Hamermesh, 1998, Cullen and Levitt, 1999).
Generating an estimate for the total costs of gun violence, beyond the costs of a partial reduction in crime-related gunshot injuries, requires some additional assumptions. Since our survey only captures crime-related gun violence, in order to estimate the costs of gun suicides and unintentional injuries, we turn to previous economic studies of the costs of workplace injuries and fatalities. Our review suggests that the costs of gun suicides and accidents is on the order of $10 to $20 billion per year, bringing the total costs of all gunshot injuries in the U.S. to about $100 billion. To put this number into perspective, $100 billion could be used to cover nearly two-thirds of those in America who are currently without health insurance, or to pay college tuition at a good public university for 27 million people roughly the entire population of New York and New Jersey combined. And this reflects the costs of gun violence for just one year.
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