Unobserved heterogeneity bias when estimating the economic model of crime
نویسنده
چکیده
Using unique and unpublished panel data from selected US cities, the paper investigates the consequences of ignoring unobserved heterogeneity in the unit of observationwhenestimating the economicmodel of crime. Results con® rmthat neglecting to control for unobserved heterogeneity overstates the ability of sanctions to deter criminal activity. Further, thisupwardbias is found tovary signi® cantly across crime types. Interestingly, heterogeneity is insigni® cant in the tightly reported crimes of murder and auto-theft while being signi® cant in assault, robbery, burglary and larceny where individuals and police have greater discretion in reporting.
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