The Social Cost of Gun Ownership

Via Marginal Revolution, comes this 2005 paper examining the social cost of gun ownership. I’ve posted the good bits below.

In sum, gun prevalence is positively associated with overall homicide rates but not systematically related to assault or other types of crime. Together, these results suggest that an increase in gun prevalence causes an intensification of criminal violence—a shift toward greater lethality, and hence greater harm to the community. Of course, gun ownership also confers benefits to the owners and possibly other members of the household. The benefits are associated with the various private uses of guns—gun sports, collecting, protection of self and household against people and varmints. But if our estimates are correct, the net external effects appear to be negative…

It is important to distinguish between gun types. While handguns make up only about one-third of the private inventory of guns, they account for 80% of all gun homicides and a still-higher percentage of gun robberies. Handguns are also used in most gun suicides. Hence the social costs of handgun ownership are much higher than ownership of rifles and shotguns. Unfortunately, it is difficult to distinguish between the prevalence of long-gun ownership and handgun ownership in aggregate data, since they are very highly correlated across jurisdictions…

What would be the optimal license fee per household? Answering this question requires monetizing the social costs of the additional homicides that appear to be generated by widespread gun prevalence. One possibility would be to assign each homicide the value per statistical life that has been estimated in previous research, a range of $3 to $9 million (Viscusi, 1998), which come primarily from studies of workplace wage-risk tradeoffs. But even the lower end of this range may overstate the dollar value required to compensate the average homicide victim for a relatively higher risk of death, given that (as noted above) such a large proportion of homicide victims are engaged in criminal activity that entails a high risk of death. For example, a study of the wage premium paid to gang members engaged in selling drugs suggests a value per statistical life on the order of $8000 to $127,000 (Levitt and Venkatesh, 2000).

Suppose that given local conditions with respect to violence and gun ownership, we estimate a ratio of 10,000 handgun-owning households per annual homicide (approximately what holds at the national average for gun prevalence and homicide with an elasticity of homicide to gun prevalence of + 0.1) Given a conservative value of life, $1 million, then the appropriate license fee for a household would be $100 per year. That license fee would increase with the homicide rate, and in some jurisdictions, such as Washington, DC, would become so high that as to be the practical equivalent of a ban on ownership (a ban on handgun acquisition is currently in place in Washington, Chicago, and some other cities). Of course, this calculation ignores the problem of compliance.

This calculation will understate the optimal license fee per gun-owning household if our assumption about the average value per statistical life for homicide victims is too low, or if, as seems likely, gun violence imposes costs on society that are not well captured by any study of the value per statistical life.

Contingent valuation estimates intended to capture the complete social costs of gun violence indicate a value of around $1 million per assault-related gunshot injury (Cook and Ludwig, 2000; Ludwig and Cook, 2001). On average one in six assault-related gunshot injuries results in death (Cook, 1985; Cook and Ludwig, 2000). Under the assumption that this case-fatality rate is stable across time and space, then at the national averages for gun prevalence and homicide our baseline estimate of a guns/homicide elasticity of + 0.10 implies that each additional 10,000 gun-owning households leads to around 6 additional crime-related gunshot injuries. If these contingent valuation estimates are approximately correct, the optimal license fee per gun-owning household would be on the order of $600. If the true elasticity of homicide with respect to gun prevalence is on the order of +0.30 rather than +0.10, as suggested by some of our estimates that are based on modifications intended to reduce measurement error, the optimal license fee may be as high as $1800 per household.


The True Test of Economic Development?

Here’s a simple test of the economic development and consumer sophistication of a nation: visit a newsstand, and look for a copy of Vogue. The arrival of an indigenous edition of fashion‘s most famous glossy magazine has become a barometer of the emergence of an affluent middle class, and a siren call to a luxury industry looking for new markets.

Before you scoff:

Because the printing cost of a copy of Vogue is much higher than the cover price, advertising is crucial. For this reason, the appetite of the luxury industry to reach consumers in a country is what brings Vogue to the newsstand. As Condé Nast’s chairman, Jonathan Newhouse, said when announcing the 2013 launch of a Kiev-based edition of his magazine: “The Ukraine is ready for Vogue … Kiev is booming, and there is a strong market demand for luxury products and the experience Vogue can offer the reader.”

There is also this passage regarding the relativly brisk magazine growth during the past forty years:

Launches in Thailand and Ukraine next year will bring the number of international Vogues to 21. Until the 1960s, there were only five editions of Vogue: in the US, UK, France, Italy and Australia. In the past 40 years, economic growth around the globe has been tracked by the arrival of Vogue editors: Russia, Japan, Korea and Taiwan have had their own Vogues since the 1990s, while the first decade of the 21st century saw launches in China and India, among others. The launch of Turkish Vogue two years ago indicated the country’s emergence as a luxury market.

You can find the article, by the Gaurdian’s Jess Cartner-Morley, here.


I very much enjoyed this essay on Analytical Marxism. And geographer David Harvey gives a Marxist perspective of the Great Recession.

The best essay I have read on epistemic humility. Epistemic humility is just like regular humility, but you get to sound (and feel) like a douchebag when you say it.

I will certainly be purchasing some of these kitchenwares recommended by Megan Mcardle. And here she defends kitchen gadgets in general. This is the best line and thesis of the work: “There’s no particular reason to assume that we have reached some sort of technological plateau where the things that we happen to do by hand right now represent the best possible methods for accomplishing those tasks.”

Virginia Postrel on innovation. Here is her thesis:

He [Bruce Gibney] forgets just how exotic airplane travel was for the typical TV viewer in 1966, when “Star Trek” debuted. Today’s cheap and easily booked flights let a lot more people fly. That means the average speed at which someone travels over a lifetime can increase even if, as Thiel laments, the fastest vehicle on the planet is no faster than it was decades ago. Making an impressive technology widely available isn’t as glamorous as pushing the technological frontier, but it represents significant, real-life progress.

Also check out her 2006 interview with EconTalk’s Russ Roberts if you have not yet listened to it.

WSJ’s Week in Ideas. Of particular interest was this line: “A study finds that fathers play a key role in transmitting dental fears to their kids—at least in Spain.” And this: “Every year, about 10% of top-level college-football teams fire their coaches because of poor performance and then wait for the wins to start coming in. A new study’s message: Don’t hold your breath.”

The Newton School Shooting, Gun Control, and Mental Health

First, of course, I speak for everyone when I say our thoughts are with the community of Newton and the families affected by the tragic school shooting today. Though I myself am not religious, those of faith are undoubtedly offering countless prayers as well. I will not try to describe the horror and sadness of today’s events as they are ineffable. Already calls for gun control have started and it is this issue I want to turn to first. Second, I will offer a few thoughts on what I’m sure will be an unfortunate discussion of mental health that will surely follow today’s events.

Gun Control

There is both a demand and supply side aspect to the problem. Generally speaking, those on the right focus on the demand side while those on the left concentrate on the supply side. Both are important.

The demand side is easy enough to describe. In the history of legal gun possession in the United States almost no one has gone into a school and massacred innocent children and teachers. In fact, relative to the number of guns in the U.S., a very small percentage of people have ever attacked another person with a firearm. What’s more, as a result of physics, a gun has never jumped off the gun rack and walked itself through the streets shooting wildly. Though the phrase, “Guns don’t kill people, people kill people” is often scoffed at, there is undeniable truth in the sentiment. It is also undeniable, however, that when it does go wrong, firearm violence can result in the worst that humanity has to offer.

It has been argued by some gun control advocates that shootings of the nature seen in Newton have increased markedly in the past, say, ten or fifteen years. But unless gun availability has increased at a similar rate, this too is an argument for a demand-side explanation.

The supply side is equally important. Suppose every individual in the U.S. wanted a gun, but the supply of guns was zero. Who would own a gun? No one. How many gun deaths would there be? Zero. This example, however unrealistic, is illustrative of the importance of supply in a market. Also, there is the economic notion that “supply creates its own demand.” This is congruent with the Apple business model in which consumer product surveys are put to the side in favor of creating innovative new products at the whim of creative designers. Consumers didn’t know they wanted an iPhone until it was invented. Malcolm Gladwell tells a similar story about pasta sauce. It could be that guns somehow spark the violent imagination in a way that would be absent otherwise. (Please don’t misunderstand my statement to be one of equating Apple products or pasta sauce with guns, that is clearly not my intent).

I would note that advocates of increased gun control presuppose that such laws have a fairly elastic relationship with gun supply. That is, a marginal increase in gun laws will cause a proportionally significant decrease in gun supply. Whether that is true or not is an empirical question. I would note that in the time that marijuana has been illegal I’ve never once met someone that has had trouble obtaining it in the medium run. In the short run, perhaps. Maybe they couldn’t get it the night they wanted it, but they could always get it within a week or two. Given the fairly tame temperament of those in my circle, I suspect this anecdote is not unusual. So clearly legality is not always tightly associated with supply. That said, I’m also confident there are numerous behaviors that have seen fairly stiff responses to changes in public policies. Again, where guns fall in this spectrum is unclear, though I’m sure someone has done interesting and insightful research on the topic (it’s simply that I’m not aware of that literature).

How will the demand and supply sides interact? Like they do in every other market. If demand remains unchanged and supply declines the price will increase. This will tend to move demand to firearm substitutes. This might include knives for self-protection, a bow and arrows for hunting, and, perhaps, homemade explosive devices or other homemade projectiles for the sort of ruthless and tragic attacks we’ve seen today. It will likely also drive black-market sales. With a high price only the very wealth — perhaps well-positioned gang members, for instance — would be able to afford firearms. If tougher prison sentences are part of gun control reform, this will add additional risk-weighted cost to possession. On net I suspect violent deaths would go down in the face of agressive gun control reform. That’s just speculation, of course. The only real way to test the effect of increased gun control is to pass tougher gun laws and keep careful note of the results.

It’s tempting to look at cross-country gun control policies for an answer and, indeed, popular culture has seen the promotion of the notion that the U.S. is especially violent due to lax gun control (think Bowling for Columbine). From a social science viewpoint these popular notions aren’t helpful since they don’t attempt to control for the enormous cross-country variations that may affect violence in any particular nation. That is not to say such analysis is not useful. In fact, cross-country studies are used regularly in the social sciences, but it takes careful and creative methodology to properly control for all the necessary factors and to tease out the real relationship between cause and effect. Again, I’m sure some careful cross-country studies of gun control have been conducted, but since it isn’t my area of expertise I’m not aware of the results. I may try to take a look and post any interesting research I find in the coming days.

One important thing to keep in mind when discussing increased gun control is exactly what we mean by that term. We can think of gun control as a spectrum. At one end is a policy of zero gun regulation. I suppose this would be a society in which any person of any age could go to any store that chose to sell guns and buy one off the shelf as if it were a bottle of shampoo. At the other end of the spectrum is 100% gun control, a society where no single person was allowed to ever have a gun on their person regardless of circumstance or occupation. The U.S. falls somewhere along that spectrum. We can quibble over how far to one side or another we are, but the important thing is that there is a long way to go between where we are now and the 100% side. Saying we need “increased gun control” isn’t very useful without specific policy suggestions since the gap between here and there leaves a lot to be worked out. Reform could mean anything from longer gun waiting periods, to harsher prison sentences, to an all out prohibition, and could include many interesting and creative policies in between.

Mental Health

As is always the case in tragedies such as the one we witnessed today, an unseen and unmentioned victim is the state of mental health discourse in our country. Focusing on perpetrators who “needed help” and family members who should have “seen the warning signs” during crises and ignoring thoughtful discussions of mental health the other 340 days of the year creates a dangerous eponymous association between “mental health” and “crazy.” It acts to stigmatize the state of mental illness and — far from helping to bring awareness — causes victims of mental health problems to ignore symptoms because, after all, “I’m not on the verge of going on a murderous rampage and those are the type of people that need counseling.” As a mental health advocate this is unspeakably frustrating. I am very proud to say that I have been to see mental health counselors over a number of periods of hardship in my life and it was immensely helpful. I’m sure I will do it again in the future. All of us, I repeat all of us, could benefit from a few sessions with a counselor. Talking about yourself and your problems to someone trained (and paid) to listen can’t go wrong. That we so often mention this simple exercise of improving self-awareness only in the context of the worst violence humanity can offer does no service to the state of mental health in our society.