In 1899, Thorstein Veblen described a type of good that is more lusted after the more expensive it is (think Ferraris). And in 1968, the economist Gary S. Becker theorized that criminals perform cost-benefit analyses just like everyone else: What are the odds of getting caught, and what’s the potential payoff? These two frameworks have lived out vibrant lives in academic journals, high-school textbooks, and college lecture halls, but, as they’re ostensibly unrelated, they’ve rarely been put in conversation with one another.
A study put out this month in Oxford Economic Papers does just that, in an effort to come up with a more nuanced understanding of the relationship between inequality and violence. There’s a good amount of research from all over the world that suggests that places with pronounced income inequality are more likely to have high rates of violent crime, a finding that makes intuitive sense: the wider the socioeconomic gap, per Becker's 1968 model, the more gains potential criminals perceive. (Not to mention, the more frustrated poorer criminals will be with society.)
But this new study takes into account the fact that it’s hard to gauge a stranger’s income—the information that potential criminals are acting on comes in the form not of pay stubs, but of proxies like expensive cars and fancy clothes. “A neighbor’s income and bank account balance,” the authors write, “are by no means perfectly observable for academic researchers or individuals considering committing crimes.” Luckily for academic researchers, though, there exist reams of data about crime and consumer spending, two topics the federal government cares deeply about.