Theory suggests that in the long term, gentrification-which I define as the phenomenon where wealthier individuals move into lower-income areas-should decrease neighborhood crime. In the short term, however, anecdotal evidence indicates that gentrification actually increases crime, perhaps due to the relative difference in status between newcomers and existing residents, and to increased opportunities for criminal behavior. Further, consumers' choice of residential location depends on crime rates, creating simultaneity that likely biases estimates that overlook this concern. I exploit the 1994 Northridge earthquake in Los Angeles and subsequent short-term government-sponsored home financing incentives as an instrument to control for this endogeneity. The exogenous event induced middle-and upper-income individuals to purchase homes in earthquake-affected low and moderate-income neighborhoods, which I argue is independent of the influence of crime. The results show that in the short term, gentrification increases assaults, robberies, automobile thefts, and thefts from automobiles.
Sociologicaltheoriesandconventionalwisdommaintainanegativerelationshipbetweenhome-ownership and crime. For example, the well-known "broken windows" theory asserts that minor problems left unattended send a subliminal message that disorder is tolerated, and as a result more serious crimes are committed (Kelling & Wilson, 1982). Sampson, Raudenbush, and Earls (1997) argue that "residential tenure and homeownership promote collective efforts to maintain social control," thereby engendering collective efficacy, where social cohesion among neighbors, combined with a willingness to intervene for the common good, results in decreased violence. Similarly, given equity stakes and lengthier average tenures, conventional wisdom suggests that homeowners have greater incentives than non-homeowners to maintain property values, more aesthetic surroundings, and safer environments. In the longer term, therefore, it is expected that homeownership-related gentrification, where households with vested interests and relatively greater resources to effectively organize for services, should eventually bring about decreased crime in the lower-income areas where gentrifiers decide to locate.However, in the short term, anecdotally there is evidence that gentrification also attracts crime. For example, the Washington DC areas described as experiencing the largest share of robberies are the gentrifying neighborhoods of Adams Morgan, Columbia Heights, Mount Pleasant, and the Direct correspondence to: Yan Y. Lee, Federal
