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The Socio Economic Determinants Of Crime In Pakistan Economics Essay

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Crime is a going concern in the whole world and it is one of the most important issue that a country has to face as it moves towards a major revolution. A crime can be defined as the activities or acts that are prohibited by state for the protection of public and anyone committing them is punishable by law.

Crime is a very important social as well as development issue. It has very devastating short run and long runs impacts on the economy and society as a whole.

This chapter provides an outlook onto what crime situation is like in Pakistan. The first crime was committed by son of Adam, when he killed his brother Abel out of jealously. Thus crime exists in our society from the beginning of mankind.

Crime trend in Pakistan

The Islamic Republic of Pakistan is a developing country with a very diverse ethnic and cultural background. . Pakistan has gone through a very troublesome time since 1947, when the forced migration from India created havoc with regards to mismanagement of resources, especially with regards to the food problem and soaring inflation, which is indicated in the high crime of figure of 73105 in the year 1947. Later on, power issues lead to internal disputes between the two wings of Pakistan, hence the war of 1971, which caused anarchy in the already fragile state of the country, shooting the crime figure up to 129679 cases. Since then, the crime trend has been rising persistently which can be attributed to the poor socio-economic profile of Pakistan. It has been observed that Pakistan is experiencing increasing poverty levels , political and economic instability, poor law and order situation, increasing corruption, income inequality, significant illiteracy, massive unemployment, rising inflation, influx of refugees (which aggravates the resource problem),further more recent energy crisis and over population has added to the increasing crime rate and it rose by 41.8% from 1999 to 2008.

In addition to that budget allocated to improve the law and order situation is not sufficient to combat the increasing crime trend. There are several law enforcement agencies at the federal and provincial level to ensure rule of law in each province but the political volatility of Pakistan and the corruption which is inherent in these organizations, renders them to be useless in enforcing law.

Crime by category in Pakistan

Crime falls into different categories and further subcategories, which mainly fall under arson, assault, homicide, kidnapping, theft offenses, motor vehicle theft, pornography, prostitution, robbery, sex offenses, property crime, weapon law violations, financial crimes for instance bad checks, curfew violations, family offenses, cyber-crimes, white-collar crimes, hate crimes, organized crime, terrorism, identity theft, political violence, terrorism, black marketeering and corruption etc.

In Pakistan, these categories of crime are following different trends in the respective provinces. Overall, statistics show that in the last ten years, the crime rate in Pakistan has increased by fifty percent, where murder cases were highest in the year 2009. Incidence of crime varies in urban and rural settings, where urban areas experience more street crime

Assessing the interregional situation, i.e. province-wise, in Punjab miscellaneous crimes have experienced the most growth, followed by crime against property .In Sindh. There has been a massive rise in crime against person. The main reason behind this is the poor law and order situation in the capital of the province; Karachi, where riots, gang crimes and bombings are a normal happening. Further the racial discrimination between Urdu speaking and Punjabis is also a main reason for increasing crime in Karachi. In Baluchistan majority of contribution comes from crime against person, which mainly pertains to tribal murders. Baluchistan experienced less incidents of crime as compared to the other provinces, but after the murder of Akbar Bugtti the crime rate has increased drastically. The NWFP was affected most due to the influx of Afghan refugees, which aggravated the crime situation, especially with regards to drugs.

Assessing crime situation in Pakistan

The crime situation in Pakistan can be assessed through many socio-economic and macroeconomic variables like population, corruption, urbanization, government effectiveness, inflation, poverty, unemployment, gini index, age dependency ratio and number of pending cases at court etc. The deteriorating law and order situation in Pakistan indicates the severity of crime.

The unemployment rate is increasing in Pakistan, in both urban and rural areas. The main reason behind this is that the employment opportunities are not keeping pace with the increase in population pressures. This increased unemployment is a very important determinant of increased crime rate in Pakistan.

The poverty level is also increasing. In 2008, 17.2% of the population was below the poverty line. This poverty gap is further increasing due to unequal distribution of income, the increasing level of corruption and poor law and order situation. The aggravating poverty situation puts pressures on the population to engage in illegal activities.

In addition to this the economic recession in Pakistan has put a very drastic impact on crime rate. As the educated unemployment and wage rate decreases the incentives for committing crime increases.

International immigrants are also increasing day by day. As the resources are scarce, the increase in population in this competitive environment forces people to engage in illegal activities to satisfy their needs.

Furthermore the increase in prices (inflation) is not matched by equivalent rise in income. As a result the purchasing power of consumers falls and they are forced to commit crime to maintain their standard of living.

As Pakistan is a developing country, most of the population lives below the poverty line, displaying the low GDP per head and the income inequality in terms of the concentration of resources in the hands of a few rich people; this combined with the inefficient regulatory and legal system of Pakistan is hindering the economic growth of Pakistan, which further provides an incentive to criminals to act in order to win in the battle for resources currently going on in the country, hence forming a vicious circle.

Another important aspect of our society is terrorism, which is continuously adding to these criminal activities cannot be ignored. Madrassas are involved in brainwashing and promoting violence in the name of jihad and t their masterminds are busy trapping young susceptible minds and recruit them as suicide bombers. The flared gap between the rich and poor is also providing an occasion to the terrorists to cash this feeling of being unnoticed in the poverty struck regions. The socio-political cost of terrorism on our economy is immeasurable. The most important impact of terrorist activity is decrease in the flow of private finance into the country. The growth in suicide attacks and counter-terror processes by the Pak Army has led to flight of capital. Now Pakistani investors are even not motivated to invest in Pakistan what to say about foreign investors. 

Chapter 2

Literature Review

A large number of studies have been conducted in the past in order to study the nature of relationship between crime and various socio-economic variables. The results however, vary overtime, between countries and among research studies.

Levitt et al. (2001) analyzed the determinants of juvenile crime using three different data sets ranging from 1973-1993 using regression analysis. Individual level analysis, census-tract panel data and state level panel data was taken. The results from the three showed that unstable homes, family environment, age played a very important role in committing juvenile crimes. Furthermore it was observed that if adults are punished severely, the crime rate drops drastically.

Weinberg et al. (2002) determined the effect of labour market conditions on crime rate in United States. Unemployment and wage rate were taken as independent variables and crime rate as dependent variable. The time frame selected was 1979-1997. By using aggregate and micro data analysis the study showed that crime rates was greatly affected by unemployment and low wage rate of unskilled males. Thus it was concluded that increase in wages can help decrease the crime rate.

Gillani et al. (2009) studied the effect of various economic indicators on crime rate for the period 1975-2007 in Pakistan. Unemployment, poverty and inflation were taken as independent variables and crime rate as dependent variable. Using Augmented Dickey-Feller test, Johansen co integration technique and Granger causality test it was proved that crime is positively related to unemployment, poverty and inflation in case of Pakistan. The study recommended that in order to control increasing crime in Pakistan unemployment, income inequalities, GDP growth, inflation etc should be addressed by policy makers; furthermore economic growth should be in favor of the poor class of society as well which constitute majority of our population.

Omotor (2009) examined the demographic and socio-economic determinants of crime from 2002-2005 in Nigeria. Pooled least square test and pooled EGLS was applied to test the lagged crime rate, per capita income and population density impact on crime. The results showed a strong positive relation between populations, per capita income, lagged crime rate on all types of crime.

Nikolaos et al. (2009) investigated the effect of socio-economic determinants on crime rate from 1971-2006 in Greece. Co integration methodologies of Johansen and Johansen-Juselis were applied to VAR model. The independent variables chosen were unemployment, total offences and real compensations whereas dependent variable was crime. A strong positive relation was found between independent and dependent variables.

Dutta et al.( 2009) analyzed the effect of socio-economic variables like economic growth, poverty, urbanization and education on crime rates from 1999-2005 in India. Zullner’s SURE model was applied to test the relationship and results obtained showed a long run positive relation between independent variables ( economic growth, poverty, urbanization, education) on dependent variable ( crime).

Han (2009) studied in his study the determinants of crime using empirical analysis over the period 1971-2000 in England and Wales. Unemployment and severity of punishment were taken as independent variables and crime as dependent variable. Engle-Granger two step procedure was used to test co integration, Dickey-Fuller and Phillips-Person test were used to test for unit root. Results obtained showed a positive relation between independent and dependent variable and it was deduced that severity of punishment and increased employment can help eliminate the possibility of committing further crimes.

Tang (2009) examined the nature of relationship between inflation, unemployment and crime rate from 1970-2006 through co integration and causality analysis in Malaysia. Johansen test was used which proved long run positive relationship between inflation and unemployment with crime. Thus inflation and unemployment were found to be two main contributory factors of increasing crime in Malaysia. It was therefore suggested that in order to control increasing crime rate these two macroeconomic evils must be controlled.

Haddad et al. (2010) investigated the socio-economic as well as demographic determinants of crime from 1996-2005 in Iran. Unemployment, inequality and family average income were taken as economic determinants; divorce rate and literacy rate as social factors; migration and population density as demographic factors affecting crime rate. F-test and Hausman Wald statistic were applied and results showed economic factors were positively related with violent crime and demographic factors were found to be closely related with property crime. However in case of social factors, it was found that with the increase in education crime rate can be reduced drastically.

Machin et al. (2010) analyzed the relationship between education and crime rate for the period 1984-2002 in Britain. To study causal impact of education on crime quasi-experimental approach was adopted. After applying regression analysis a strong negative relation was found between education and crime. As the rate of educated persons increases crime rate especially property crime decreases drastically because with the increase in education, employment increases which in turn increases the family income which contributes in lowering crime rate.

Kadri et al. (2011) determined the relationship of inflation, unemployment, investment, education and health on increasing criminal activities from 1980-2007 in Pakistan. Augmented Dickey-Fuller test, Phillips Pearson test were used to test the integration and cointegrating regression Durban-Watson, Engle-Granger two step procedure, Johansen- Juselis method were applied to test long run positive relationship. It was concluded that education and health had a significant relation with crime, however inflation and unemployment were found insignificant in two out of three crimes. In addition to that investment was found to be negatively related with crime.

Zwienen (2011) investigated the effect of unemployment on crime rate both at regional and national level. Using regression analysis for data from 1961-2007, it was concluded that unemployment and crime were closely related with each other and had a long run positive relationship. The study revealed the fact that the magnitude of increase in crime rate during economic recession was much greater than the decrease in crime rates during economic recovery.

Baharom et al. (2012) studied the nature of relationship between crime and various economic variables. Income, unemployment, inflation, interest rate and political violence were taken as independent variables and crime rate as dependent variable. Applying panel-error-correction based cointegration on data collected from 1960-2001 of 21 countries, it was proved that a negative relation exists between crime and income; as income increases the probability of committing a crime decreases. On the other hand a strong positive relation was proved between unemployment & crime, inflation & crime and interest rate & crime. However political violence was also found to be negatively related with crime.

Jalil et al. (2012) analyzed the impact of urbanization on crime in Pakistan. The time frame taken was 1964-2008 and methodology adopted was Johansen Cointegration technique and unit root test. The results obtained showed that urbanization has a very strong positive relation with increasing crime in case of Pakistan. It was suggested that districts should be developed to absorb the rapid urbanization; furthermore more job opportunities should be provided in rural areas to control rapid urbanization.

Aurangzeb (2012) examined the determinants of crime in Pakistan from 1980-2010 using regression analysis. The study revealed that household consumption, wage rate, GDP, literacy rate and population were positively related with increasing crime in Pakistan, however electricity crisis had a weak positive relation with crime .The study suggested that more employment opportunities, provision of basic necessities and control on population growth rate can help reduce the crime situation in Pakistan.

PROBLEM STATEMENT

What are the socio-economic determinants of crime in Pakistan?

HYPOTHESIS FORMULATION

The crime rate is affected by unemployment, inflation, poverty, international immigrants and government effectiveness

Hâ‚': There is no significant relation between unemployment, inflation, poverty, international immigrants and government effectiveness on dependent variable i.e. crime rate.

H1: There is a significant relationship between unemployment, inflation, poverty, international immigrants and government effectiveness on dependent variable i.e. crime rate.

OBJECTIVES OF THE STUDY

The research aims to study the impact of different variables on the crime rate in Pakistan. The objective of the study is:

To determine whether unemployment, inflation, poverty, government effectiveness and international immigrants affect crime rate using multiple regression model.

CHAPTER # 3

METHODOLOGY

This chapter pertains to the theoretical framework of the model which aims to find the determinants of crime rate in Pakistan. For this purpose Statistical Package for Social Sciences (SPSS 17.0) has been used for analysis and testing hypothesis.

3.1 Type of investigation

This is a time series longitudinal analysis, where crime rate is dependent upon the independent variables including unemployment, inflation, poverty, international immigrants and government effectiveness.

3.2 Source of data

Secondary sources of data have been used in the study. The data on crime rate has been taken from the Statistical Yearbook of Pakistan. The data on independent variable included in the research i.e. international immigrants, government effectiveness and unemployment has been taken from World Development Indicators database. Whereas the data on poverty and inflation has been taken from economic survey of Pakistan.

3.3 Time period for the study

The study analyses the socio-economic determinants of crime in Pakistan for the period 1980-2011 i.e. for 32 years.

3.4 Theoretical Framework

The theoretical framework provides the relationship between the dependent variable i.e. crime rate and the independent variables i.e. unemployment, inflation, poverty, international immigrants and government effectiveness.

UNEMPLOYMENT

INFLATION

POVERTY

CRIME RATE

INTERNATIONAL IMMIGRANTS

GOVERNMENT EFFECTIVENESS

Dependent variable Independent variables

3.5 Variable selection criteria

In the study following variables have been used: crime rate, unemployment, poverty, inflation, government effectiveness and international immigrants. For the entire variables the time frame selected is 1980-2011.

3.5.1 Dependent Variable

3.5.1.1 Crime rate

The study aims to investigate the determinants of crime in Pakistan. Thus crime rate is used as a dependent variable. The variable has been assessed through socio-economic causes. For that, simple regression has been run, to determine the cause of increasing crime rate.

3.5.2 Independent Variable

3.5.2.1 Unemployment

Unemployment means the people who are educated and are willing to work but unable to find a job. It has been measured by unemployment with tertiary education as a percentage of total unemployment, where tertiary education is classified as post-secondary education. As the educated unemployment will increase, it will have a positive impact on the level of organized crime especially on crimes like kidnapping and robbery, as unemployment creates anxiety and people gets frustrated. They suffer from extreme stress and strain because they are unable to earn a good living, as a result they turn towards crime.

3.5.2.2 Inflation

Inflation as measured by the consumer price index reflects the cost of living of an average consumer, as measured by a fixed basket of goods. The relationship of inflation with organized crime is such that as it will lead to increases in crime due to the fact that inflation reduces the purchasing power as the real income is decreased and people will employ illegal sources of income in order to maintain their standard of living.

3.5.2.3 Poverty

Poverty Headcount ratio measures the percentage of people living below the poverty line. Poverty is found to have positive relation with crime because when people will be deprived from basic necessities of life, the wealth will be concentrated in just few hands of the society then poor will be forced to engage in illegal activities in order to satisfy their needs.

3.5.2.4 Government effectiveness

Government effectiveness according to the WDI database represents the quality of public services, institutional integrity and the reliability of public policies. Government effectiveness is defined within a range of 2.5 to -2.5. As government effectiveness increases and the quality of institutions and reliability on government increases, the incidences of organized crime will decrease as people will feel secure, they will trust on government officials because they will believe that their policies will be in favor of general public.

3.5.2.5 International immigrants

International immigrants creates a shortage of the already scarce resources due to infrastructural inefficiency hence in order to ensure a minimal standard of living, people resort to crimes like kidnapping and robbery. Thus it also has a positive relation with crime.


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