Bruce Sacerdote

Crime and Social Interactions

The high degree of variance of crime rates across space (and across time) is one of the oldest puzzles in the social sciences (see Quetelet (1835)). Our empirical work strongly suggests that this variance is not the result of observed or unobserved geographic attributes. This paper presents a model where social interactions create enough covariance across individuals to explain the high cross- city variance of crime rates. This model provides a natural index of social interactions which can compare the degree of social interaction across crimes, across geographic 1units and across time. Our index gives similar results for different data samples and suggests that the amount of social interactions are highest in petty crimes (such as larceny and auto theft), moderate in more serious crimes (assault, burglary and robbery) and almost negligible in murder and rape. The index of social interactions is also applied to non-criminal choices and we find that there is substantial interaction in schooling choice.

An Economic Approach to Social Capital

To identify the determinants of social capital formation, it is necessary to understand the social capital investment decision of individuals. Individual social capital should then be aggregated to measure the social capital of a community. This paper assembles the evidence that supports the individual-based model of social capital formation, including seven facts: (l) the relationship between social capital and age is first increasing and then decreasing, (2) social capital declines with expected mobility, (3) social capital investment is higher in occupations with greater returns to social skills, (4) social capital is higher among homeowners, (5) social connections fall sharply with physical distance, (6) people who invest in human capital also invest in social capital, and (7) social capital appears to have interpersonal complementarities.

Why Is There More Crime in Cities

Crime rates are much higher in big cities than in either small cities or rural areas. This paper explains this connection by using victimization data, evidence from the NLSY on criminal behavior, and the Uniform Crime Reports. Higher pecuniary benefits for crime in large cities can explain at most one‐quarter of the connection between city size and crime rates. Lower probabilities of arrest and a lower probability of recognition are features of urban life, but these factors seem to explain at most one‐fifth of the urban crime oeffect. Between one‐third and one‐half of the urban effect on crime can be explained by the presence of more famale‐headed households in cities.

The Social Multiplier

In many cases, aggregate data is used to make inferences about individual level behavior. If there are social interactions in which one persons actions influence his neighbors incentives or information, then these inferences are inappropriate. The presence of positive social interactions, or strategic complementarities, implies the existence of a social multiplier where aggregate relationships will overstate individual elasticities. We present a brief model and then estimate the size of the social multiplier in three areas: the impact of education on wages, the impact of demographics on crime and group membership among Dartmouth roommates. In all three areas there appears to be a significant social multiplier.

Why Doesn't the Us Have a European-Style Welfare System?

European countries are much more generous to the poor relative to the US level of generosity. Economic models suggest that redistribution is a function of the variance and skewness of the pre-tax income distribution, the volatility of income (perhaps because of trade shocks), the social costs of taxation and the expected income mobility of the median voter. None of these factors appear to explain the differences between the US and Europe. Instead, the differences appear to be the result of racial heterogeneity in the US and American political institutions. Racial animosity in the US makes redistribution to the poor, who are disproportionately black, unappealing to many voters. American political institutions limited the growth of a socialist party, and more generally limited the political power of the poor.

Peer and social networks in job search

Abstract We examine how Dartmouth College seniors use social networks to obtain their first jobs. We do this by analyzing self reports of networking and by examining the correlation in employment outcomes among randomly assigned freshman roommates and hallmates. We find that the use of social networks differs for men and women and for white and nonwhite students. Networking also differs greatly across career types. Students networking with fraternity and sorority members and alumni are the most likely to obtain high paying jobs. There is a strong connection between own employment outcomes and outcomes for randomly assigned freshmen hallmates.

From Natural Variation to Optimal Policy? The Importance of Endogenous Peer Group Formation

We take cohorts of entering freshmen at the United States Air Force Academy and assign half to peer groups designed to maximize the academic performance of the lowest ability students. Our assignment algorithm uses nonlinear peer effects estimates from the historical pre-treatment data, in which students were randomly assigned to peer groups. We find a negative and significant treatment effect for the students we intended to help. We provide evidence that within our �optimally� designed peer groups, students avoided the peers with whom we intended them to interact and instead formed more homogeneous subgroups. These results illustrate how policies that manipulate peer groups for a desired social outcome can be confounded by changes in the endogenous patterns of social interactions within the group.

Colonialism and Modern Income -- Islands as Natural Experiments

Using a new database of islands throughout the Atlantic, Pacific, and Indian Oceans we find a robust positive relationship between the number of years spent as a European colony and current GDP per capita. We argue that the nature of discovery and colonization of islands provides random variation in the length and type of colonial experience. We instrument for length of colonization using variation in prevailing wind patterns. We argue that wind speed and direction had a significant effect on historical colonial rule but do not have a direct effect on GDP today. The data also suggest that years as a colony after 1700 are more beneficial than earlier years. We also find a discernable pecking order among the colonial powers, with years under U.S., British, French, and Dutch rule having more beneficial effects than Spanish or Portuguese rule. Our finding of a strong connection between modern income and years of colonization is conditional on being colonized at all since each of the islands in our data set spent some time under colonial rule.

Nature and Nurture Effects On Children’s Outcomes: What Have We Learned From Studies of Twins And Adoptees?

Abstract There is a rich history of using data from twins and from adoptees to control for genetic influences and thereby examine the impact of environment on childrens outcomes. The behavioral genetics model is the workhorse of this literature and for a variety of outcomes including IQ scores and personality measures behavioral geneticists find that the bulk of the variance that can be explained is correlated with genetic influences. However, finding that variation in test scores has a large genetic component is quite different than asking whether test scores can be improved by interventions and changes in policy or whether such interventions pass a cost benefit test. Economists have recently begun asking how the intergenerational transmission of educational attainment, income and health vary when a child is being raised by adoptive rather than biological parents. Results suggest that both the biological and the nurturing parents contribute a great deal to the transmission of income and education to their children JEL Codes: I0, J0, J24

The Response of Criminals and Noncriminals to Fines

We use traffic data from a series of experiments in Israel and San Francisco to examine how illegal behavior is deterred by higher fines and whether deterrence varies with personal characteristics such as criminal record, driving record, income, and age. We find that red‐light running decreases sharply in response to an increase in the fine. The elasticity of violations with respect to the fine is larger for younger drivers and drivers with older cars. Criminals convicted of violent offenses or property offenses run more red lights on average but have the same elasticity as drivers without a criminal record. Within Israel, members of ethnic minority groups have the smallest elasticity with respect to a fine increase.