The Agenda

The Power of BIDs


How can we harness private action to advance public crime control? Philip Cook and John MacDonald offer thoughts on LoJack and the success of Business Improvement Districts (BIDs), among other things. This is exactly the kind of argument that will raise alarm bells from social democrats and egalitarians of all stripes. I’m drawn to it.

[W]e find a clear connection between the “dose” (the amount of BID spending on private security) and the “response” (crime reduction). Every $1,000 spent in a BID neighbourhood generates $20,000 of social benefit in the form of crime reduction – a remarkable 20-to-1 benefit-cost ratio.

The city of Los Angeles also saves money because the arrest rate actually decreases in BIDs. And there is no evidence that crime is displaced to neighbouring areas. Thus, the social cost savings from BID security expenditures is an order of magnitude greater than expenditures and provides a direct payoff to the streets where they provide extra private security.

It appears very much in the interest of Los Angeles to continue providing organisational support for its BIDs. On the other hand, the analysis does not imply that all other neighbourhoods in Los Angeles should organise, since it is reasonable to suppose that many of the areas with the highest potential payoff have already organised. 

I’m eager to learn more. Some years ago, a group in New York city tried to establish a BID-like organization for an affluent residential neighborhood on Manhattan’s Upper East Side, a proposal that was rejected. One can see why politicians found the proposal discomfiting, yet this might allow for the diversion of crime control resources to less affluent neighborhoods. The rejoinder, of course, is that it might mitigate concern about crime control among the affluent, thus reducing the political pressure to address the citywide crime control problem. I’m not sure that this would actually come to pass, but it is a reasonable conjecture that deserves to be taken seriously. 


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