The Effect of Police on Crime : New

Using a new panel data set on crime in medium to large U.S. cities over 1960-2010, we show that (1) year-over-year changes in police per capita are largely idiosyncratic to demographic factors, the local economy, city budgets, measures of social disorganization, and recent changes in crime rates, (2) year-over-year changes in police per capita are mismeasured, leading many estimates in the literature to be too small by a factor of 5, and (3) after correcting for measurement error bias and controlling for population growth, a regression of within-state differences in year-over-year changes in city crimes on within-state differences in year-over-year changes in police yields economically large point estimates. Our estimates are generally similar in magnitude to, but are estimated with a great deal more precision than, those from the quasi-experimental literature. Our estimates imply that each dollar spent on police is associated with approximately $1.60 in reduced victimization costs, suggesting that U.S. cities employ too few police. The estimates confirm a controversial finding from the previous literature that police reduce violent crime more so than property crime. JEL Classification: C14, C21, C52.