Report on the Economic Impact of Homicides

Report Date: October 23, 2019
Controller: Rebecca Rhynhart
Report Tags
  • economic impact,
  • gun violence,
  • homicides

Executive Summary

As the financial watchdog for the City of Philadelphia, the Office of the City Controller works to ensure the efficient and effective operation of the city government. In that capacity, the office evaluates issues that impact the City’s finances, its ability to provide services to residents and possible policy solutions. As part of that goal, the Controller’s Office studied the rise in homicides in Philadelphia. In 2018, Philadelphia had the highest homicide rate per capita of the top ten largest cities with 351 murders – the most homicides in more than a decade. As of today, Philadelphia is on track to match or surpass last year’s recent high. Rather than looking at the devastating human cost and community trauma implications of a homicide, which is difficult to quantify, the Controller’s Office analysis focused on the impact of homicides on property values and the potential increase in tax revenue from reducing homicides. The report uses the potential economic benefit as a leverage point to consider alternate or more concerted investment in proven violence reduction strategies

When discussing homicides, it is important to note that the vast majority of homicides involve a firearm and gun violence does not affect all populations or communities equally in Philadelphia. The population most affected by this violence is young, black or African American men. Gun violence is deeply complicated and the impact of social and economic disinvestment, along with intergenerational structural racism including residential segregation, cannot be understated.

The Impact of Homicides on Property Values

This study analyzed all homicides (4,121) and more than 220,000 residential property sales that occurred between 2006 and 2018. It identifies sales in the immediate vicinity of a homicide, comparing the prices just before and just after the homicide to similar price changes for homes that are farther away, unaffected by the homicide. The results of the study show that homicides have a sizable effect on residential property sale prices.

  • On average, sales that occur closer to a homicide tend to have lower prices than sales that occur farther from a homicide. Our results indicate that a single homicide lowers sale prices by 2.3 percent in the immediate neighborhood (within 0.75 miles of the homicide). Therefore, a reduction of one homicide would lead to a corresponding 2.3 percent increase of sale prices in the immediate neighborhood
  • A single year reduction of homicides by 10 percent translates to about a $13 million increase in property tax revenue. Reducing homicides by 10 percent annually for five years translates to a total increase of $114 million in property tax revenue, including $43 million in year five alone.

With any meaningful reduction in gun violence, the City would likely experience a number of secondary economic benefits, in addition to increasing property tax revenue. Research shows that reducing gun violence could positively impact business disinvestment, job loss and depopulation in the most disadvantaged neighborhoods in the city.

Investment in Violence Reduction Solutions

While Philadelphia’s homicide rate has increased by 41 percent since 2013, other major cities have seen their homicide rates decrease in recent years. Violence reduction efforts in other cities show that relatively small amounts of funding, if invested in and implemented correctly, can lead to large reductions in homicide rates. Considerable evidence shows that strategies like Cure Violence, Group Violence Intervention and cognitive behavioral therapy are successful. The Oakland plan, for example, has been credited with a 32 percent decrease in gun homicides in the five years after its implementation in 2012. Oakland saw its homicide rate, overall, drop by nearly 50 percent over the same time period.

Research suggests that if the City invested $30,000 per homicide in these proven violence reduction strategies, homicides could decrease by 10 percent annually. Using this research and Philadelphia’s 2018 homicide total, the Controller’s Office determined that Philadelphia could reduce homicides by 35 percent with a $43 million investment over a five year period. This decrease in homicides would translate into a more than $70 million return on investment, increased property tax revenue minus program costs.

Ultimately, meaningful progress to reduce gun violence and homicides will require short- and long-term solutions that address the violence itself, as well as the underlying structural and historical issues that lead to it. It will also need a coordinated and well-funded partnership between the mayor, community stakeholders, the district attorney, the police department, and the courts, with due consideration given to the victims of this violence and their families. The work in this report was conducted to help further necessary conversations to ensure meaningful progress can occur.

Read the full report here or view the data and software used in the analysis.