The Economics of Violence - What's wrong with Chicago?

I live in Chicago so my out-of-town friends assume that I must be well-acquainted with violence. Luckily that is not the case. Despite Chicago’s reputation, our city’s travails are hardly unique in urban America. Our particular crisis in leadership predates Covid, and it does not look like real change is coming anytime soon.

On Friday, Mayor Lori Lightfoot left City Hall for the last time. It was not a fond farewell.

“You shut down our schools, you shut down the churches, you shut down the businesses. You did the one thing I thought could never happen: As somebody who was born and raised on the South Side of Chicago, I never thought in my life that I would ever see the city of Chicago brought down so low...I hope that, after today's city council meeting, you will pack your suitcase and get the hell out of my city.” (Chicago reporter William Kelly)

Chicago is different than other cities in several respects. Violence has not decreased as much as it has in other large American cities, but it is better than most in the Midwest. High homicide rates are concentrated in specific neighborhoods and negligible in others. Recently retail theft and carjackings have spread to the area around the Magnificent Mile, making crime more visible to wealthier citizens, although murder rates on the North Side remain quite low.

Armed violence is however is on the rise. On May 9th, a new study on gun violence in Chicago was published in the Journal of the American Medical Association (JAMA). The extent of the shootings is truly jaw-dropping - I had to read this section twice:

The overall sample size was 2418 respondents, with 1209 males (50.00%) and 1209 females (50.00%) and 890 Black respondents, 1146 Hispanic respondents, and 382 White respondents. By age 40 years, 6.46% of respondents had been shot and 50.00% of respondents had seen someone shot.

By age 40, 7.47% of Black respondents and 7.05% of Hispanic respondents had been shot, with 1 Black respondent and 1 Hispanic respondent having been fatally shot. In contrast, 3.13% of White respondents had been shot by age 40 years.

The sounds of gunshots have become commonplace throughout the city. I have an app called Citizen that alerts me to gunfire and other incidents such as lost dogs in my neighborhood. Lest you think that gun laws are the answer to this problem, Chicago already has some of the toughest gun laws in the country. The problem is with our justice system. The violence is voluntary, not inevitable, and in a real sense is condoned by our politicians.

Chicago PD

Last week, a very young Chicago policewoman who should have been standing in line this weekend to receive her master’s degree from Loyola was fatally shot on her way home from work, the sixth victim in a string of robberies that night. Former Chicago Tribune columnist John Kass is always worth reading, but he is impassioned about her story:

And Chicago did raise four young men who allegedly murdered 24-year-old Chicago Police officer Aréanah Preston. She was gunned down outside her Southside home as the four teenagers were on a robbery spree targeting women. 

You might say Chicago and those four teens– with serious and violent criminal records who should have been locked up and kept behind jail bars– gave Preston’s mom a Mother’s Day she will never forget. The killers left a hole that can never be filled. They took everything from that mom.

Kass is referring to the policy of no cash bail that means that alleged criminals awaiting trial are free to roam the streets and commit multiple offenses. In January, Illinois became the first state in the country to institute “pre-release” and do away with bail payments under a law called somewhat ironically the SAFE-T Act.

The system is broken and police in Chicago are quitting in record numbers. They already have their hands full, but Chicago’s status as a sanctuary city has meant a steady flow of migrants has now become a flood. None of this is likely to change soon, since incoming mayor Brandon Johnson, whose election was not supported by the police union, is already being called Lori 2.0. In the meantime, police stations are also housing the migrants, adding additional burdens to a force in crisis.

Texas governor Greg Abbott, infuriated by the lack of federal support to maintain his states’s border with Mexico, has started shipping recent migrants to northern cities, including Chicago. Some are set to be housed in the poorer sections of the city, and local residents, who have found themselves removed from waiting lists for public housing in favor of the new arrivals are furious. They don’t want local their used as housing. Local residents are protesting:

‘Why would any leader put our black communities, already riddled with crime, at further risk by placing unvetted non-taxpayers steps away from our seniors, our children and our homes that we have worked so hard to secure?' another furious resident asked at a press conference. In the background could be heard the chant ‘Build That Wall!’
https://www.dailymail.co.uk/news/article-12079259/Chicago-community-97-v...

The Economic Costs of Violence

This chaos is costing Chicago dearly, but violence seems to be on the rise around the world post-Covid. The global burden of armed violence was calculated by the Geneva Declaration report back in 2008, a time of relative peace:

The cost of lost productivity from non-conflict or criminal violence alone is about USD 95 billion and may reach as high as USD 163 billion per year. War-related violence decreases the annual growth of an average economy by around two per cent for many years.

These human and economic costs make armed violence a development issue and explain why the development community is increasingly motivated to promote its prevention and reduction.

in 2023 these cost estimates might be woefully low. With homicide rates exceeding Tijuana, Mexico, the murder capital of the world, certain sections of the City of Chicago are in reality third world countries nestled within a first-world city. In many ways, Chicago is a tale of two cities.

According to Crain’s Chicago Business:

The violence results in both direct and indirect costs, including lost business, fewer jobs, lowered productivity, declining property values, rising emergency and long-term medical costs, ripples of disinvestment across the city's more troubled neighborhoods, and burdens on the criminal justice system.

‘Gun violence fundamentally shapes the way people in Chicago lead their lives,’ says Northwestern University gun-violence researcher Andrew Papachristos, who has studied the topic extensively. The costs, he says, ‘whatever they are, we very likely underestimate them.’

A few years ago, BCG tried to calculate the economic costs of gun violence in Chicago:

Researchers like to use death as a metric, since it is consistently reported in all jurisdictions. In 2022, 637 people were killed by guns in Chicago. The clearance rate, or solved homicides is just 50%. So that means direct costs would be $478M when murderers have been caught. That does not include what economists call the Value of a Statistical Life, or VSL, which is often pegged at $10M. That would mean a loss of $6.37B plus city costs of $478M or $6.84B in a single year.

How would that work out for the US as a whole? Chicago’s portion is tiny, a little more than 3% of the nearly 21,000 gun murders in the US in 2021. Most gun fatalities are suicides:

In 2021, 54% of all gun-related deaths in the U.S. were suicides (26,328), while 43% were murders (20,958), according to the CDC. The remaining gun deaths that year were accidental (549), involved law enforcement (537) or had undetermined circumstances (458).
https://www.pewresearch.org/short-reads/2023/04/26/what-the-data-says-ab...

Just based on VSL, and no direct costs, the staggering impact of gun murders in America is $210B which is 1% of US GDP. There is really no way to calculate the true costs of all forms of violence. It is a form of involuntary tax paid by both victims and society.

Territoriality

Why this rise in violence? Primates such as chimpanzees resort to organized violence primarily as a way to maintain territoriality and zones of safety. In humans institutionalized violence as we know is called war. In Chicago, the chance that you will become a casualty is highly dependent on where in the city you live. Migrants who displace current residents, and criminals leaving their neighborhoods to rob others, both disturb territoriality even if their intentions are different.

Establishing and maintaining territory also can have positive results. Northwestern University economic historian Joel Mokyr writes about conditions in which growth takes place, and why Europe, with its mosaic of nation states and defined borders, developed advanced technologies ahead of other regions. The development of defense and military technologies has also had beneficial effects. In a way, the threat of violence has boosted innovation.

Violence as a Public Health Issue

Violence is defined by the World Health Organization as “the intentional use of physical force or power, threatened or actual, against oneself, another person, or against a group or community, that either results in or has a high likelihood of resulting in injury, death, psychological harm, maldevelopment or deprivation”.

Earlier this week I had the pleasure of meeting an expert in this subject, Professor Herbert Pollack from the University of Chicago, and since then have been reading his papers.

Access to permanent housing, financial security, and quality health care are foundational for leading a healthy and fulfilling life. For many individuals, lack of stability in such dimensions of life correspondingly promotes repeated cycles of service use between the homelessness. criminal justice, and hospital systems.

(Soo J, Hoay L, MacCormack-Gelles B, Edelstein S, Metz E, Meltzer D, Pollack HA. Characterizing Multisystem High Users of the Homeless Services, Jail, and Hospital Systems in Chicago, Illinois. J Health Care Poor Underserved. 2022;33(3):1612-1631. doi: 10.1353/hpu.2022.0088. PMID: 36245184.)

In Chicago, the underlying institutions that create economic stability are overtaxed. There are tents in our parks, violence in our streets, and emergency rooms with waiting times that can stretch into days, not hours. Urban Labs at the University of Chicago found that one in seven students in this city has experienced homelessness. What does this mean for educators, and these young people’s lives?

My youngest daughter is not much older than Officer Preston. She is a certified rape counselor who volunteers for a victim support group in Chicago called Resilience, which has led me to think more about violence against women. There is no force on earth that can completely prevent violence- it is part of the human condition. But we can find ways to deal with it as a public health threat.

Organizations such as Resilience are examples of some of the good things that are happening in this city. Sadly I just learned that they will lose half of their annual $1M in taxpayer support this summer. If you are looking for a great cause to donate to please click here. Dealing with violence is all about making it a political priority. We are failing to do that, but as individuals, we can do something.

Mother's Day

In spite all of this, and to answer the question you may have, I am not leaving Chicago. I love this beautiful, complicated city. Most of my family, and many of my friends live here. As Grandmother Hughes used to say, sensible people belong where they’re put. And fight the good fight.

On this Mother’s Day, I am lucky enough to have my mother with me. I am blessed with both children and grandchildren. My wish for mothers all over the world who are facing conditions of war and deprivation is for peace, the prosperity that is impossible without political stability, and good leadership. Chicago, and this whole world, can be a better place.