THE RELATIONSHIP OF POLICE AND CRIME

This study develops a model to measure the impact of police expenditure on crime rates across cities. It specifically allows for the two-way relationship between police and crime. Other things being equal, cities with more police per capita should have lower crime rates, if police reduce crime. Simultaneously, the higher the crime rate, the greater the public demand for police. In its final formations, the model contains two identifiable equations with two endogenous variables, police expenditure per capita and the crime rate. Following a discussion of the reliability of crime statistics, the model is estimated by two-stage least squares, using FBI crime data for 119 cities in 1960. These two-stage results are compared with ordinary least-square estimation results and are found to be clearly superior.