alchool and misbehavior: evidence from sales restrictions in the são paulo metropolitan area joão...
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Alchool and Misbehavior: Evidence from Sales Restrictions
in the São Paulo Metropolitan Area
João De Mello (PUC-RIO) and Alexandre Schneider (EAESP-FGV and São Paulo Mayorship)
Research Question
Is there evidence that restricting alcohol sales in bars has an impact on violent crime?
Is it relevant for policy?
• Several Latin-American cities have adopted similar restrictions– Bogotá 1994 is the most prominent example– Diadema often cited as successful crime fight
• The Economist, 10/20/2005
• Several historical examples of similar legislation– American Prohibition
Is it relevant for policy?
• On the other hand ...– Sales restrictions also entail welfare losses
• Therefore:
– Is there an effect on violent crime?– Is it first-order?– Are there less intrusive means of offsetting (alleged)
adverse effects of alcohol consumption?
Is it relevant for policy?
• Mr. Churchill on the later point:
“In our country, just as in ours, an enormous problem of misery, poverty, and crime ... resulted from alcohol. We, however, used different weapons. We used the weapons of regulation and taxation," Winston Churchill, referring to the prohibition, on a US tour speech in 1931
Overview• The Law
• The Chronology of Events
• Data
• The Empirical Strategy
• Results
• Conclusion
The Law
• Diadema, for example:
The Law
• Other cities that adopted have very similar laws
• It varies slightly on
– Specific times
– Specific days of the week
The Chronology of EventsMês/Ano da Aprovação da Lei Seca - Municípios da Região Metropolitana de São Paulo
MunicípioData da Lei
Barueri Mar-01
Jandira Aug-01
Itapevi Jan-02
Diadema Mar-02
Juquitiba Maio-02
São Lourenço da Serra Jun-02
Suzano Jun-02
Itapecerica Jul-02
Mauá Jul-02
Poá Ago-02
Ferraz de Vasconcelos Set-02
Embu Dez-02
Osasco Dez-02
Embu – Guaçu Abr-03
Vargem Grande Paulista Dec-03
São Caetano Jul-04
Kahn, Túlio e Zanetic, André. Municípios na Segurança Pública – Em Estudos Criminológicos 4, Julho 2005.
There is variation in adoption timing
16 cities out of 39 in the SPMA
The Chronology
• Cities that have not adopted– Franco da Rocha, Guararema, Guarulhos,
Biritiba Mirim, São Bernardo do Campo, Santa Isabel, Arujá, Itaquaquecetuba, Mairiporã, Mogi da Cruzes, Rio Grande da Serra, São Paulo, Pirapora do Bom Jesus, Ribeirão Pires, Taboão da Serra, Santana do Parnaíba, Santo André, Salesópolis, Cotia, Francisco Morato, Cajamar, Caieiras, Carapicuíba
– 23 out of 39 cities in the SPMA
Data
• City level data on Homicides from Jan-1999 to Dec 2004– Secretaria de Segurança Pública do Estado de São
Paulo
• City population – IBGE
• Presence of Alcohol Law (and timing), Municipal Justice Secretary, Municipal Policing– Kahn and Zanetic [2005]
The Empirical Strategy
• Difference-in-Difference Model
– Compare the evolution of homicides, before and after the adoption, between cities that adopted and cities that have not adopted the Law
– Cities that have not adopted the law are the “control group”
• It decreases significantly the possibility of capturing spurious effects due to
– Time trends
– Concurrent events
The Empirical Strategy
ititti
itiit
CONTROLSMONTHCity
CLAWLAWHOMICIDES
ε
γγγ
++Ω+Σ
+++= 210
• i = City
• t = MonthHomicides per thousand inhabitants
Dummy for the cities that adopted the law
Dummy for the cities that adopted the law and for the periods after adoption
City specific DummyMonth specific Dummy
Municipal police and Municipal Justice Secretary
The Empirical Strategy
• The Hypothesis:
ititti
itiit
CONTROLSMONTHCity
CLAWLAWHOMICIDES
ε
γγγ
++Ω+Σ
+++= 210
γ2 < 0 if the law has an effect on homicides
The Empirical Strategy
• Our model:
• Traditional
ititti
itiit
CONTROLSMONTHCity
CLAWLAWHOMICIDES
ε
γγγ
++Ω+Σ
+++= 210
itititi
tiit
CONTROLSCityTREATMENTLAW
TREATMENTLAWHOMICIDES
εγ
γγγ
++Σ+×+
++=
3
210
? No uniform treatment period
Monthly dummies do the job
The Empirical Strategy
• Model for the Variance– Huge heterogeneity in city-size– Homicide is not such a common occurrence– Observations from small cities much noisier than large
cities– We weight the data to “turn the model heteroskedastic”
( )it
it populationVAR
2σε =
The Empirical Strategy: Caveats
• Unobserved heterogeneity between control (non-adoption) and treatment (adoption) groups
• Endogeneity of adoption
• Spillover effects
Caveats: Unobserved Heterogeneity
• Police reaction to increases in crime– Adopting cities adopt in high crime periods. – Policing also react to high crime periods
• Why doesn’t it hurt us too bad?– Decision level: state government– Difference in the timing of reaction– Rigidity of allocation of police force– Size of police force does not respond to crime:
• By law, city-level police force is determined by population• Any major changes have implies changes in the law
Caveats: Endogeneity of Adoption
• We want to estimate:
• But
Law Crime
Crime Law
Caveats: Endogeneity of Adoption
• Sign of the OLS bias: Hard to determine
– Crime before affects adoption
– Adoption affects crime after
– Sign of bias would depend on the dynamics of homicide
Caveats: Endogeneity of Adoption
• The scenario that would hurt us:
– Cities adopt in periods of historically high homicide
– Homicide is a mean-reversing period
Caveats: Endogeneity of Adoption
• Does homicide look mean-reversing?
Caveats
• Law induces more drinking in neighboring cities
– Solution: compare only far away cities
ResultsDependent Variable: Homicides per 100thd inhabitants
Date < December 2003
Whole sampleDate < December 2003,
excluding São Paulo(1) (2) (3)
-0.227 0.173 -0.253(0.581) (0.348) (0.409)
-0.585*** -0.434*** -0.593***(0.144) (0.145) (0.180)
0.072*** 0.089*** 0.063**(0.021) (0.026) (0.028)
0.064*** 0.076*** 0.058**(0.021) (0.024) (0.026)
0.074*** 0.099*** 0.083***(0.021) (0.023) (0.023)
0.081*** 0.099*** 0.086***(0.021) (0.019) (0.026)
0.068*** 0.080*** 0.074**(0.021) (0.025) (0.029)0.625 0.488 0.738*
(0.983) (0.354) (0.417)-0.480*** -0.176 -0.516**
(0.178) (0.215) (0.216)-0.920 -0.346 -0.646(0.717) (0.344) (0.407)-0.165* 0.065 -0.234(0.098) (0.103) (0.155)
-8.48e-07* -5.45e-07 -1.64e-06(5.02e-07) ( 3.87e-07) (2.57e-07)
Number of Observations 2301 2808 2242
Municipal Force*Time of Adoption
Municipal Secretary Justice
Municipal Secretary*Time of Adption
Law
AdoptLaw
Homicides per 100thd inhabitants t- 1
Homicides per 100thd inhabitants t-2
Homicides per 100thd inhabitants t-3
Homicides per 100thd inhabitants t-4
Homicides per 100thd inhabitants t-5
Population
Municipal Police Force
Persistence in homicide
ResultsDependent Variable: Homicides per 100thd inhabitants, Only Diadema
Only Sub-Sample of Controls‡
All cities without law
(1) (2)0.886 -0.136
(3.169) (4.731)0.907 -0.793
(0.793) (0.279)-1.988*** -1.597***
(0.511) (0.024)0.086* 0.071***(0.048) (0.024)0.047 0.067***
(0.048) (0.024)0.056 0.091***
(0.048) (0.024)0.129*** 0.093***(0.048) (0.024)0.046 0.071***
(0.048) (0.025)-1.824** 3.982(0.818) (4.976)0.263 -0.221
(0.365) (0.165)0.528 2.951
(0.933) (4.832)-0.171 -0.039(0.313) (0.102)
-1.52e-06 -1.84e-07(4.15e-06) (4.63e-07)
Number of Observations 504 1800
Dummy Diadema
Dummy Diadema x Dummy Treatment Period
Homicides per 100thd inhabitants t- 1
Homicides per 100thd inhabitants t-2
Dummy Treatment Period†
Municipal Police Force
Municipal Force*Time of Adoption
Municipal Secretary Justice
Municipal Secretary*Time of Adption
Population
Homicides per 100thd inhabitants t-3
Homicides per 100thd inhabitants t-4
Homicides per 100thd inhabitants t-5
Control group: similar size and not contiguous to Diadema
Results
• Economic significance and contrafactuals– Is it first-order?
• 0.585 (all treated) = 77% of a standard deviation of homicides
• If São Paulo had adopted (Back-of-envelope calculations based on estimate):– 0.585x100x12=702 annual homicides