Estimates of the costs of crime to the national economy are now fundamental to decision-making by policy makers in the developed western world. It is only by making such estimates that, for instance, resources can be allocated according to objective cost-benefit criteria.
However, compiling such estimates involves a number of methodological difficulties — starting with defining economic damage, through measuring the extent of criminal activity, to translating the damage into money terms. A recent policy paper made use of large-scale research studies from around the world, but in particular it adopted the methodology of two studies conducted in the United Kingdom and Australia.
The purpose of this paper is to estimate the cost to the Israeli economy caused by the crime in Israel, due to the growth of the role homeland security plays in the larger picture of national strength, the continuous decrease in the personal security of Israeli citizens, and the ongoing trends which raise the need to place the field of homeland security in the center of the national agenda.
The following findings emerge from the paper’s analysis of the Israeli data:
- The cost of crime to the Israeli economy in 2007 is estimated at 12.9 billion NIS (at the rates of 2007)
- The recent data for 2007 is the lowest cost of crime in Israel since the phenomenon has been examined in 2001.
- The accumulated damage to the Israeli economy from crime is estimated at 101.5 billion NIS.
In order to further promote the rapid improvement over the past years, a national prioritization of homeland security is needed, including focusing intense activities in the battle against crime.
Estimating the economic damage caused to a country from crime is a complicated process. Nevertheless, the need for rational law enforcement and crime prevention activities are self evident in order to make decision based on cost-benefit criteria.
The cost of crime to the Israeli economy over 2007 is estimated at 12.9 Billion NIS. This number excludes other damages which were not mentioned in this paper, such as the economic damage caused by traffic offenses and costs of law enforcement, trials and punishment which costs otherwise could have been allocated to alternative activities.
Over the past years there has been an improvement and gradual decrease in the economic cost of crime in Israel. Yet, the damage is still equal to approximately 2% of the Israel's GDP, and must still be further minimized.
The analysis presented in this document translates the criminal reality in the State of Israel into monetary terms and indicates the clear and extensive damage caused to the Israeli economy as a direct result of crime.
Despite the general improvement over the past years, it seems from this analysis that the improvement is not homogeneous throughout all types of crime. Thus, in 2007, in accordance with the strengthening of local police stations, as instructed in the Minister of Public Security's policy, which started in the beginning of 2006, there is has been a decrease in damage caused to the economy by crimes which lead to a decrease in the sense of security amongst the citizens.
This fact has implication on a number of levels:
Firstly, an increase in the budget of the Ministry of Public Security should be seen as a governmental investment in an essential infrastructure of economic growth, and we are to expect that this investment will bring significant positive returns by minimizing the costs of crime to the Israeli economy.
Secondly, the emphasis put on the battle against crime in general and in street crime in particular, along with the strengthening of the local police stations and the transfer of all correction and prisoner escort responsibilities to the Israel Prison Service which allowed the Israel Police to focus on its core responsibilities, is starting to pay off.
Thirdly, in order to continue this positive trend over the past years, while tending to the uneven damage caused by different types of crime, it is necessary to emphasize the battle against crime as a national goal and to reevaluate the resource allocation in a way is compatible with achieving the maximum benefit for the Israeli society.
In light of the above and the extent of the economic damage caused by crime, homeland security should be set as a national priority. Such a decision will include foundations of stable and suitable budgetary planning, increasing the resource allocation for the Ministry of Public Security in order to implement pivotal programs, transforming the Israel Police and the Israel Prison service into more appealing organizations attracting quality manpower, more effective and efficient planning, and examination and follow-up after achieving the set national goals.
Danny Krivaa
Director
Department of Planning, Budgeting and Monitoring
Ministry of Public Security
Israel