Economic Impacts of Gun Violence

The psychological, social, and financial burdens gun violence places on individuals and society are well-researched. This project explores a different perspective on gun violence: its impact on community-level economic health, about which comparatively little is known.

This series of publications shares research based on newly available business establishment and credit score data, along with gunshot and sociodemographic data by census tract and gun homicide data in six cities. While the specific economic effects of gun violence differ by city, the results demonstrate that gun violence is detrimental to neighborhood economic health.

“Surges” occur when gun violence increases sharply and suddenly. In the neighborhoods where gun violence surges take place, they significantly reduce the growth of new retail and service businesses, leading fewer local jobs to be available for neighborhood residents and fewer local establishment available for residents to shop at. And, housing values appreciate more slowly.

Across five cities, gun violence surges slowed neighborhood home value appreciation by ~4 percent. Also decreasing? Average credit score and homeownership rates.

Learn more: “Gun Violence Affects the Economic Health of Communities

As part of this project, researchers spoke to residents, business owners and civic organizations in these cities. Interviews confirmed their experience matched what the data showed. Business owners in these neighborhoods were forced to take on the cost of enhanced security measures, while suffering because local residents don’t feel comfortable shopping after dark. Residents shared the perception that gun violence hurts their housing prices, driving existing community members to relocate and prospective new residents to avoid moving to affected neighborhoods.

Among other things, the project’s research has led to the recommendation of increasing public-private community partnerships in gun violence reduction. These partnerships can lead to cycles wherein business development promotes economic well-being, creates jobs, and reduces gun violence, which in turn drives additional business growth.

This research report presents preliminary results on the effect of gun violence on local economies, providing findings from three cities: Minneapolis, Minnesota; Oakland, California; and Washington, DC. The study finds that an increase in gun homicides or gunfire in neighborhoods can lower the number of retail and service business establishments, the number of new jobs created, and the volume of sales in business establishments. While the specific types of local economic effects of gun violence differ by city, in all cities we found that an increase in gun violence has some type of a negative effect on business growth.

The Effect of Gun Violence on Local Economies

Despite broad interest in estimating the economic costs of gun violence at the national and individual levels, we know little about how local economies respond to increased gun violence, especially sharp and sudden increases (or surges) in gun violence.

Our report found that surges in gun violence can significantly reduce the growth of new retail and service businesses and slow home value appreciation. Higher levels of neighborhood gun violence can be associated with fewer retail and service establishments and fewer new jobs. Higher levels of gun violence were also associated with lower home values, credit scores, and homeownership rates.

Interviews with local stakeholders (homeowners, renters, business owners, non-profits, etc.) in six cities across the United States confirmed that the findings match their experience. Business owners in neighborhoods that experience heightened gun violence reported additional challenges and costs, and residents and business owners alike asserted that gun violence hurts housing prices and drives people to relocate from or avoid moving to affected neighborhoods.

Some of the report’s key findings include:

Impact of Gun Violence Surges on Local Business Growth, Home Values, Homeownership Rates, and Credit Scores across Cities

  • Gun homicide surges in census tracts reduced the growth rate of new retail and service establishments by 4 percent in Minneapolis, Oakland, San Francisco, and Washington, DC.
  • Gun homicide surges in census tracts slowed home value appreciation by 3.9 percent in Baton Rouge, Minneapolis, Oakland, San Francisco, and Washington, DC.
  • Gunshot surges in census tracts slowed home value appreciation by 3.6 percent in Oakland, Rochester, San Francisco, and Washington, DC.
  • Neither gun homicide nor gunshot surges were observed to reduce homeownership rates or credit scores in these cities. Homeownership rates might not fall as quickly as home values in response to sudden surges in gun violence because selling a home and moving may take a long time or may simply not be feasible for some residents.

Relationships between Gun Violence and Business Outcomes, Home Values, Homeownership Rates, and Credit Scores within Cities

  • In Minneapolis, each additional gun homicide in a census tract in a given year was associated with 80 fewer jobs the next year.
  • In Oakland, each additional gun homicide in a census tract in a given year was associated with 5 fewer jobs in shrinking businesses the next year.
  • In Washington, DC, every 10 additional gunshots in a census tract in a given year were associated with 20 fewer jobs among new establishments, one less new business opening, and one more business closing the same year.
  • In San Francisco, there was no association between levels of gun violence in census tracts in a given year and business outcomes the next year.
  • Analysis of gun homicides in 2014 and home values, homeownership rates, and credit scores in 2015 demonstrated that each additional gun homicide in a census tract was associated with the following outcomes:
    • A $22,000 decrease in average home values in Minneapolis census tracts and a $24,621 decrease in Oakland census tracts.
    • A 20-point decrease in average credit scores in Minneapolis census tracts and a 9-point decrease in Oakland census tracts.
    • A 3 percent decrease in homeownership rates in Washington, DC, census tracts and a 1 percent decrease in Baton Rouge census tracts.

There were no associations between gun homicides in a given year and home values, homeownership rates, and credit scores the next year in Minneapolis, Oakland, San Francisco, or Washington, DC, census tracts from 2009 to 2014 or in Baton Rouge census tracts from 2011 to 2014.

A Neighborhood-Level Analysis of the Economic Impact of Gun Violence

Despite broad interest in estimating the economic costs of gun violence at the national and individual levels, we know little about how local economies respond to increased gun violence, especially sharp and sudden increases (or surges) in gun violence. This brief summarizes findings that surges in gun violence can significantly reduce the growth of new retail and service businesses and slow home value appreciation. Higher levels of neighborhood gun violence can be associated with fewer retail and service establishments and fewer new jobs. Higher levels of gun violence were also associated with lower home values, credit scores, and homeownership rates.

Gun Violence Affects the Economic Health of Communities