Via VOX EU

A deadly pandemic, street protests against racial injustice, the National Guard, calls for law and order. The year was 1968 and US cities were in for a long slog. American city centres used to conjure up dystopic visions of crime and decay. Early-1980s movie classics include Escape From New York and Blade Runner. Later in the decade, the trial of the Central Park Five played into the fear of super predators on the rampage. In 1990, New York City recorded 2245 murders. The tailspin seemed unbreakable. But somehow it did. For several years now, New York City has been one of the safest cities (if not places) in the US, counting less than one murder per day. At the national level, between 1993 and 1999, homicides fell by 40% – from 9.5 to 5.7 per 100,000 people. Skilled workers have flocked to not just cities, but city centres, and housing prices have shown a clear centrality premium (Diamond 2016).

A building boom followed, relentlessly powering through the mortgage crisis and the ensuing recession. In mid-March, construction cranes punctured the Manhattan skyline. They may still be there in the wake of the pandemic, but will the demand be? The demographic that fueled decades of gentrification are now leaving the city in droves, as told by newspaper headlines as well as first-hand anecdotal evidence (Edlund et al. 2015). After months of working from home (Dingel and Neiman 2020), ‘home’ itself may have to change. This, at least, appears to be the conclusion that many have drawn as the pandemic drags on.

The urban-suburban trade-off was always about ‘space against commuting’. Now that commuting only means ‘travelling’ as far as the nearest Ethernet hookup, and nobody leaves home (ever), a room of one’s own beats the room where it happens.1

Is IT the new automobile?

Once the dust settles (it has only been three months since we closed up shop and ran for the hills), will renewed interest in suburban living be the new normal? And if so, what will happen to the urban renewal we have grown accustomed to count on/rail against? The choice of locals notwithstanding, the travel and hospitality sectors were early victims of the pandemic (Voth 2020). Much of the impact was felt by cities which, in the last decades, have emerged as formidable recreational destinations in their own right. New York City had 65 million visitors in 2019 (spending approximately 44 billion dollars), twice as many as in 2000. Will cities simply become less crowded and more affordable, or will the rewind button take us all the way back to the crime-infested 1980s, as skilled professionals decamp for the suburbs and the tourism and hospitality money dries up?

To answer that question, it is important to consider exactly why cities were murderous in the first place, and what subsequently brought down crime in the 1990s.

‘White flight’ is often mentioned as a precursor to the urban decay of the 1970s and 1980s. As the middle class left, so did social order, goes one explanation. In amenities-driven explanations of gentrification, the process is reversed (Guerrieri et al. 2013). Amenities (including public safety) improve, the middle class returns, and then amenities improve further. Could Covid-19 be the ‘speed bump’ that reverses the gears again, as restaurants, bars and other social spaces are closed until further notice?

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Another factor is drugs. The crack cocaine epidemic of the late 1980s has been widely implicated in the homicide records of the period. How drug use has been impacted by Covid-19 is too early to tell. However, the pandemic aside, drug use since the 1990s has by no means gone away. In fact, before the pandemic, the US public health crisis of note centred around drugs, most of them not prescribed (Case and Deaton 2015).

So, we are potentially facing high drug use, falling city revenues, and a flight to the suburbs. Is violent crime next? We think possibly not. The reason is linked to the same technology that allows so many professionals to work from home: the digital revolution. The fall in violent (and other) crime in the US in the 1990s coincided with the main-streaming of cell phones. The 1990s was a decade of cellular network expansion. It was also the decade of the transition to digital telephony – the combined result of which was better telephony at a lower cost.

In a recent working paper (Edlund and Machado 2019), we argue that as cell phones Become increasingly mainstream, there has been a pacifying effect on gangs because drugs could now be retailed without access to ‘turf’. Before cell phones, illicit drugs were sold in private or public networks (Johnson et al. 2000). Dealing in private networks was through contacts, ‘friend-of-a-friend’, and did not generate much violence. The public one, by contrast, did. As drug use became more common in the 1970s, street markets (places where drugs were sold more or less openly) popped up in cities. These were places that were both relatively central and ignored by law enforcement. Once a location had established a reputation as a marketplace, control of that territory (turf) equated to control of drug retailing in the area.

As a result, street gangs could cartelise local drug retailing. Drugs were more profitable than any other activity (Levitt and Venkatesh 2000), and successful street gangs became known as drug gangs. Drug gangs were not only profitable, they were also apt practitioners of deadly violence. The violence stemmed from the combination of profitability, illegality, and territoriality (we hypothesize). Profitability meant there was something valuable to fight over. Illegality meant that the means would be violent (rather than court battles or aggressive business practices). And all of this was then magnified by territoriality – space that can be patrolled and fought over.

Cell phones changed the above calculation. With cell phones, sellers and buyers could make contact and coordinate on any number of places to meet. Without turf, gangs could no longer keep rival gangs or independent dealers out. With increased entry, profits fell, and there was neither the place nor the money to fight over.

The end of turf as a reason for the fall in violent crime suggests that most urban crime would have been concentrated in a few areas, and these areas would account for the ‘lion’s share’ of the decline in crime during the 1990s. This is also what criminologists found when studying the micro-geography (down to the street segment) of crime in Seattle (Weisburd et al. 2004). Furthermore, over the same period, drug prices took a tumble. According to the UN Office on Drugs and Crime, the US retail price for Heroin fell from approximately $300 to $150 (per gram). In fact, the affordability of illegal drugs is rarely discussed during analyses of the drug epidemic. These days, a bag of heroin may retail for less than a lunch sandwich2 – a far cry from days of yore when drug addicts were known to turn to theft or prostitution to service their addiction.

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To study the role of cell phones for violent crime (homicides in particular), we would ideally have not just a local measure of cell phone usage (which, inter alia, could be endogenous to local criminality), but a measure of something that influenced cell phone uptake. To that end, we used antenna structure locations in the US. A cellular network provides mobility by passing calls between hexagonal cells whose cores consist of a base station and antennas on a tall structure. The construction of this infrastructure takes time. The first cellular telephone call was tried out in 1973 when Motorola inventor Martin Cooper placed the call from a makeshift base station in Midtown Manhattan to the rival Bell Labs across the Hudson River. Commercial services would have to wait another ten years, the time it took to establish networks with meaningful coverage (at this stage, the phones were also barely portable, and were sometimes called car phones).

In 1983, Chicago and the Baltimore-DC area pioneered the service. Through the 1980s, the service was analog (1G) which limited carrying capacity. In practice, each call was given its dedicated subchannel (a fraction of the available spectrum). This capacity limitation was overcome with the switch to digital technology (2G), introduced in the early 1990s.

The Federal Trade Commission (FTC) keeps a national register of antenna structures taller than 200ft above ground. The register includes year of construction and detailed location, allowing us to map out the network expansion of cellular telephony from the 1970s onwards. In fairness, the antenna structures could have housed antennas for other services than cellular telephony, for instance television or radio antennas. However, cellular telephony and other mobile radio communication services accounted for the bulk of the network expansion since that first prototype call in 1973.

Additionally, the impact of network expansion on availability/affordability of basic voice and text services (the ones we propose changed drug dealing) likely varied by period. In the 1970s, there was expansion, but no service. In the 1980s, there was service, but it was analog and expensive. It was the 1990s when the service went mainstream. In 1998, cellular service was included in the Consumer price index. The number of US subscribers went from five to 100 million over the decade (for an entertaining account of the early days of cellular communication, see Murray 2001).

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Digital technology paved the way for mainstreaming of cellular telephony. However, two events merit a special mention. First, in 1993, congress tasked the FTC with making more spectrum available and encouraging competition. Second, in 1994, AT&T bought McCaw Cellular, thereby becoming the first provider to offer national coverage. Combining antenna data with county-level homicide data, we found a negative relationship between the two (except for during the 1970s – the period when there was no service). Consistent with our hypothesis, this pattern was stronger in the 1990s and within ‘more urban’ areas.

Back to the 1980s?

Contagious disease ripping through cities is not new (consider pest, cholera, flu). In the past, cities have bounced back. The economies of agglomeration have, time and time again, proven their mettle. But the past pandemics have happened against a backdrop of easy and cheap video interaction. Further, while not great for socialising or networking, working from home has (so far) proven surprisingly doable. Thus, while suburban living may be in for a revival, whatever flight takes place, our research suggests that a return to the ‘bad old days’ need not be in store.

References

Alon, T, M Doepke, J Olmstead-Rumsey and M Tertilt (2020), “The impact of the coronavirus pandemic on gender equality”, VoxEU.org, 19 April

Case, A and A Deaton (2015), “Rising Morbidity and Mortality in Midlife among White Non-Hispanic Americans in the 21st Century”, Proceedings of the National Academy of Sciences 112(49):15078-15083.

Diamond, R (2016), “The determinants and welfare implications of US workers’ diverging location choices by skill: 1980-2000”, American Economic Review 106(3): 479-524.

Del Boca, D, N Oggero, P Profeta and M Rossi (2020), “Women’s work, housework, and childcare before and during COVID-19”, VoxEU.org, 19 June. 

Edlund, L and C Machado (2019), “It’s the phone, stupid: Mobiles and murder”, Working Paper 25883, National Bureau of Economic Research.

Edlund, L, C Machado and M Sviatschi (2015), “Bright minds, big rent: Gentrification and the rising returns to skill”, Working Paper 21729, National Bureau of Economic Research.

Guerrieri, V, D Hartley and E Hurst (2013), “Endogenous gentrification and housing price dynamics”, Journal of Public Economics 100: 45-60.

Johnson, B D, A Golub and E Dunlap (2000), “The rise and decline of hard drugs, drug markets, and violence in inner-city New York”, in Blumstein, A and J Wallman (eds) The Crime Drop in America, Cambridge: Cambridge University Press.

Levitt, S D and S A Venkatesh (2000), “An economic analysis of a drug-selling gang’s finances”, Quarterly Journal of Economics 115(3): 755-789.

Murray, J B (2001), Wireless Nation: The Frenzied Launch of the Cellular Revolution in America, Cambridge: Perseus Publishing.

Voth, J (2020), “Trade and travel in the time of epidemics”, in Baldwin, R and B Weder di Mauro (eds) Economics in the Time of COVID-19, a VoxEU eBook, CEPR.

Weisburd, D, S Bushway, C Lum and S-M Yang (2004), “Trajectories of crime at places: A longitudinal study of street segments in the city of Seattle”, Criminology 42(2): 283-321.

Endnotes

1 Three meals a day, children in distance learning, it all adds up, see Alon et al. [2020] and Del Boca et al. [2020]. 

2 For instance, https://www.statnews.com/2018/11/08/costs-heroin-naloxone-tragic-snapshot-opioid-crisis/