Police Infrastructure, Police Performance and Crime: Evidence from Austerity Cuts

The effect of neighbourhood police on citizens’ welfare is poorly understood. Yet, this is a key parameter in evaluating the impacts of reductions of police spending. I exploit a large wave of austerity cuts to police forces in London, which resulted in the closure of 70% of police stations, while preserving the police force size. I combine novel granular data on reported crime, location of police stations and their closure, and information on individual crimes’ judicial outcomes. I show that the reduced local police presence led to a persistent significant increase in violent crimes, consistent with lower deterrence, and reduced clearance rates, indicating lower police effectiveness. I also provide suggestive evidence consistent with reduced reporting of non-violent crimes, as citizens internalise a higher reporting cost. Overall, the policy led to a sizeable reduction in citizens’ welfare, which I document by showing a decrease in house prices concentrated in high-crime and more deprived census blocks, further exacerbating already existing inequality. Together, the closures produced considerable distributional and efficiency losses, and generated costs that substantially outweigh the benefits in terms of lower public expenditure for the criminal justice system.