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On the cost of gun ownership

On 1 October 2017, 59 people were killed and another 489 injured in what is currently the deadliest mass shooting in US modern history. The author reviews recent contributions on the economic cost of gun violence, as well as the impact of regulation.

By: Date: October 11, 2017 Topic: Global Economics & Governance

The Washington Post makes the math of mass shootings.There is no universally accepted definition of a mass shooting, and different organizations use different criteria. The Post piece uses a narrow definition and looks only at deadliest mass shootings, beginning August 1, 1966. Based on this criteria, they identify 131 events in which four or more people were killed by a lone shooter (or two shooters in three cases). An average of eight people died during each event, taking the total death toll to 948. It’s worth checking out the Post’s piece for their impressive work in collecting details about each case.

Vox has 17 relevant facts on gun violence in the United States. Looking at the number of firearm homicides per 1 million people, the US, has 29.7, which is about six times as many as Canada (5.1) and nearly 16 times as many as Germany (1.9). While accounting for about 4.4% of the world’s population, US accounts for almost half of the civilian-owned guns around the world. Since Sandy Hook in 2012 (the deadliest mass shooting in modern American history, before the one of last week) there have been more than 1000 shootings in which four or more people were shot at all. Under the broader definition of mass shootings, the United States have nearly one mass shooting a day.

Every mass shooting resurfaces a debate about gun control, which revolves around security on one hand and constitutional freedom on the other hand. Opinions diverge widely when it comes to the effect of tighter regulation on guns. A heated academic and policy debate concerns the relation between the strictness of gun laws and gun violence/crime. Vox points out that firearm homicides, like all homicides and crime, have declined over the past two decades (although that may have changed in 2015 and 2016.) There’s still a lot of debate among criminal justice experts about why this crime drop is occurring – some point to mass incarceration, more and better policing, and reduced lead exposure from gasoline. The question of whether right-to-carry (RTC) laws have an important impact on crime has been at the centre of a vast production of literature.


Source: Vox

One theory is that more guns deter crime. In 1997, John Lott and David Mustard argued that RTC laws decreased violent crime (“More Guns, Less Crime” hypothesis). Using cross-sectional time-series data for US counties from 1977 to 1992, their results suggested that  allowing citizens to carry concealed weapons deters violent crimes and it appears to produce no increase in accidental deaths.

The theory has been questioned by much contemporaneous as well as more recent research. TheHarvard Injury Control Research Centre has a literature review on the relationship between guns and homicides, supporting opposite conclusions. Ayres and Donohue argued that, estimating on more complete county data, in most states shall-issue laws have been associated with more crime. The apparent stimulus to crime tends to be especially strong for those states that adopted in the last decade.

Donohue, Aneja and Weber replicated very recently some of the previous research and found consistent estimates showing RTC laws increase overall violent crime and/or murder when run on the most complete data. They also use a synthetic control approach to generate state-specific estimates of the impact of RTC laws on crime. Their major finding is that under all four specifications tested, RTC laws are associated with higher aggregate violent crime rates, and the size of the deleterious effects that are associated with the passage of RTC laws climbs over time. Ten years after the adoption of RTC laws, violent crime is estimated to be 13-15% percent higher than it would have been without the RTC law. Using a consensus estimate for the elasticity of crime with respect to incarceration of .15, the average RTC state would have to double its prison population to counteract the RTC-induced increase in violent crime.


State laws on firearms vary considerably across the US. Coates and Pearson-Merkowitzz examine policy spillovers, by looking at how different state gun control policies affect the migration of guns between states with lax regulatory environments for gun purchasing and licensing to states with strict regulatory environments. They use data from 2007 to 2013 from the Bureau of Alcohol, Tobacco and Firearms on presence of criminal guns and from the Brady Campaign on state gun control laws. Results suggest that a large proportion of criminal guns in states with strict gun control laws were originally purchased in states with fewer regulations. There is a direct correlation between where criminal guns were originally purchased, where criminal guns are uncovered, and the strength of state gun laws. The framework of state gun control laws is prone to policy spillovers, to the extent that they shift the “market” for criminal guns to purchasing locations across state borders where purchasing is easier.

Todd Frankel at the Washington Post argues that one reason why policy positions are so intractable is that no one really knows what works to prevent gun deaths. Frankel argues that gun-control research in the United States essentially came to a standstill in 1996 when the Republican-majority Congress threatened to strip funding from the Centers for Disease Control and Prevention. The so-called Dickey Amendment – introduced after lobbying by the National Rifle Association – mandated that none of the funds made available for injury prevention and control at the CDC may be used to advocate or promote gun control. Frankel argues that as a result, the CDC stopped funding gun-control research – which reduced money for almost all public health studies of the issue nationwide. A history of the Federal funding freeze is outlined by Christine Jamieson, on the website of the American Psychological Association. Frankel also highlights that the National Institute of Justice funded 32 gun-related studies from 1993 to 1999, but none from 2009 to 2012, according to Mayors Against Illegal Guns. The institute then resumed funding in 2013, in the wake of the Sandy Hook Elementary shooting the year before.

Gun violence is terrible and has many unquantifiable effects. Nevertheless, economists have tried to quantify the economic cost of gun violence. It is a daunting task. There is an obvious health cost, but also more indirect economic costs at the national and local level, as well as general social costs. Such an analysis, of course, is never a substitute for the ethical and moral consequences of gun violence.

A recent Johns Hopkins study analysed data on treatment costs resulting from gun violence based on a nationally representative sample of 704,916 patients in the United States who arrived at an emergency room alive for treatment of a firearm injury from 2006 to 2014. The research team found that firearm injuries were ninefold higher among male than female patients and were highest among males 20 to 24 years old. The average emergency department and inpatient charges annually were $5254 and $95887, respectively, resulting in approximately $2.8 billion in annual charges for the group studied. The overall incidence of ED admissions for firearm-related injuries decreased 22.9% from 2009 to 2013. However, emergency department visits generally increased for those older than 30 and increased overall for the entire study population in 2014. The proportion of patients who arrived with a previously diagnosed mental health disorder rose over the study period.

Besides direct health-related costs, gun violence can have other economic effects. Despite broad interest in estimating the economic costs of gun violence at the national and individual levels, we know little about how local economies respond to it. A recent report by the Urban Institute finds that higher levels of neighborhood gun violence can be associated with fewer retail and service establishments, fewer new jobs, lower home values, credit scores, and homeownership rates. The report is based on interviews with local stakeholders (homeowners, renters, business owners, non-profits, etc.) in six cities across the US and provides estimates for the effect of increased gun violence on the growth of business activity, employment and house prices.

Previous research by Cook and Ludwig tried to figure out what sorts of costs gun owners impose on the rest of society. They estimated the effect of household gun prevalence on homicide rates, and inferred the marginal external cost of handgun ownership. The estimates utilized a proxy for gun prevalence, the percentage of suicides committed with a gun, and used county- and state-level panels for 20 years. The estimated elasticity of homicide with respect to gun prevalence was between +0.1 and + 0.3. All of the effect of gun prevalence is on gun homicide rates. Based on Cook and Ludwig’s assumptions, the average annual marginal social cost of household gun ownership is in the range $100 to $600.

A report compiled by Mother Jones together with the economist Ted Miller puts the total cost of US gun violence at about $229 billion per year, or about 1.4 percent of GDP. Although gun suicides now outnumber gun homicides, much of the direct costs of gun violence comes from homicides and assaults – mostly reflecting the cost of imprisoning the perpetrators.

Noah Smith argues that the Mother Jones’ analysis is problematic, because of the assumption it makes in order to estimate two overwhelmingly important indirect costs: death, and loss of quality of life for victims of gun violence. Mother Jones values each human life at $6.2 million dollars, based on the results of lawsuits. It also calculates quality of life by looking at court awards in wrongful injury cases. One cost that the analysis does not look at  – Smith argues – is that of wasted resources: when gun violence is high, people try to protect themselves by getting guns of their own; this boosts the size of the firearms industry and provides jobs to people who work in gun factories, but those are resources that would be put to better use if people felt safer. Overall, Smith argues that the question cannot be put in purely economic terms because the economics profession has few reliable tools for putting a dollar figure on these costs. Maybe this is one of those cases where popular sentiment and moral principles should take precedence over the calculation of economists.


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