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

Research Report

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

Abstract

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.

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