THE ECONOMIC AND SOCIAL COSTS OF CRIME
Supt Goh Boon Keng
1.
INTRODUCTION
The harm caused by criminal activities is extensive and far reaching, much
more than we would normally think. It goes beyond the injury and loss
suffered by victims during the crime. As a result of victimization, crime
victims often have to spend money for medical treatment, repair or replace
property damaged/stolen, and suffer loss of productivity in addition to
emotional trauma. In order to protect the safety of citizens and maintain
peace and security of the society, every nation spends considerable sums
of money in law enforcement. Citizens and social organizations too, invest
some money to protect themselves from victimization. In sum, crime is a
costly social phenomenon. It would thus be interesting and pertinent too, to
calculate the impacts of crime in financial terms, instead of merely looking
at the number of crimes committed, to have a more comprehensive
assessment of the extent of destruction/damage done via criminal activities.
Such effort has recently been initiated in some advance countries like the
US1, UK2 and Australia3. This study could well be the first ever attempt in
Malaysia to assess the economic costs of crime in the country. Assessment
is made for the year 2004 only.
It is doubtful that the full costs of crime will ever be calculated accurately.
Apart from the straight forward costs of property stolen and damaged, most
of the other costs could only be estimated with appropriate techniques and
relevant data. Some costs are simply based on estimates from other field of
research, while others are omitted due to the lack of appropriate techniques
and data. Mayhew (2003)4 concurred that the empirical basis for assessing
costs is weak in many cases. Whereas Brand and Price (2000)5 admitted
that their cost estimates were inevitably imprecise as the quality of the
available evidence on the costs of crime is good in some cases, patchy in
many, and poor in several.
As no such endeavour has ever been done in Malaysia, this study follows
strictly the costing format of Mayhew of Australia which itself was based
mainly on methodologies of UK studies such as Brand and Price’s.
Attempts are made insofar as possible to use local data for estimations.
1
For example, see Shapiro, E. (1999) Cost of Crime: A Review of the Research Studies,
House Research Department, Minnesota House of Representatives: Minnesota.
For example, see Brand, S and Price, R (2000) The economic and social costs of crime,
Home Office Research Study 217, Research, Development and Statistics Directorate, Home
Office: London.
3
For example, see Mayhew, P (2003) Counting the Costs of Crime in Australia, Australia
Institute of Criminology: Canberra. And
Australia Federal Police (2004) AFP Drug Harm Index, Research Note 5, AFP Research
Notes Series: Australia.
4
Ibid
5
Supra N. 2
2
When suitable local data are not available, Australia and UK data are used.
Admittedly, accuracy and reliability are compromised in such undertaking.
Nonetheless, it does provide a rough estimation of the actual costs and
represents a first step towards making a more explicit assessment of the
impacts on society of different types of crime.
2.
WHY MEASURE COSTS OF CRIME?
Besides gauging the impact of crime in economic sense, a cost of crime
measure provides a justification for resources spent on reducing crime, and
provides an indication of how successful the government is at reducing the
impacts of crime. Estimates of the social and economic costs of crime can
have an important role in achieving the greatest impact on crime for the
money spent. They can increase the awareness of both policy-makers and
the public in general of the full impact of crime on society and the potential
gains that could result from reductions in crime. Estimates of the costs of
individual crimes enable us to make better-informed decisions about which
policy measures are the most effective, by allowing meaningful
comparisons to be made of the costs and benefits offered by alternative
crime reduction measures. They can also help us to prioritize, focusing
scarce resources on policies that have the biggest impact on harm caused
by crime, in addition to the number of crimes.
Some crimes clearly have greater consequences than others. For example,
a murder has a greater impact on society than a simple theft offence. A
costs of crime performance measure is designed to focus criminal justice
system policy-makers and practitioners on the most cost-effective solutions
to crime, by ensuring due account is taken of both the effectiveness of
crime prevention measures and the relative seriousness of different
offences, rather than simply focusing on the aggregate volume of crime.
3.
WHAT ARE ECONOMIC AND SOCIAL COSTS?
The financial costs of certain impacts of crime are readily recorded, such as
the value of stolen property and the amount of money spent on crime
prevention and enforcement. These are referred to as the “economic costs”.
Other impacts are not fully or directly reflected in the financial
consequences of crime, such as trauma, physical injury and change of lifestyle as a result of fear of crime. “Social costs” refers to these impacts that
cannot be readily expressed in cash terms. For a comprehensive
assessment, both of the costs must be taken into consideration. It would be
misleading and incomplete to measure only the economic costs as this
would omit important impacts of crime and so would tell only part of the
story. Crimes such as robbery or rape, which have significant ‘intangible’
costs, would appear much less serious than they actually are, whilst other
crimes would appear relatively more serious. It is therefore important to try
and quantify all the impacts of crime in common terms as far as possible.
Money can be used in this situation simply as a means of comparing one
thing (e.g. the physical impact of a broken leg) with another (e.g. the cost of
a hospital bed).6
However, in this paper, no attempt is made to classify each cost as either
economic or social due to practical difficulties. Economic and social costs
are treated as one and the same.
4.
COSTING METHODOLOGY
4.1.
Identifying types of costs
Costs of crime are numerous, some of which are difficult or even impossible
to quantify due to either practical difficulties or non-availability of relevant
data. Even though researchers try as far as possible to compute all
consequences of crime in cash terms, no study has ever fully assessed the
myriad costs of crime.7 Brand and Price (2000)8, for example, categorized
costs of crime into ‘cost in anticipation of crime’, ‘cost as a consequence of
crime’ and ‘cost in response to crime’; and listed the types of costs that
were included in their study as well as those that could not be estimated for
theoretical reasons or lack of data. The relevant costs are as follows:
6
7
8
(i)
Cost in anticipation of crime: These fall mainly on people
as potential victims – for instance, what they pay for
security measures.
Estimated – security expenditure and insurance resources.
Not estimated – precautionary behaviour, fear of
crime/quality
of
life
of
potential
victims,
collective/community defensive expenditure, government
crime prevention activities, and insurance premium.
(ii)
Cost as a consequence of crime: These fall mainly on
the actual victims, particularly in terms of property loss and
damage.
Estimated – property stolen and damaged, lost output,
emotional and physical impact, health services, and victim
support services.
Not estimated – insurance claims and quality of life of
victims.
(iii)
Cost in response to crime: These fall mainly on the
criminal justice system.
Estimated – Police, prosecution, legal aid and non legallyaided defence costs, magistrates and crown courts,
probation service, prison service, jury service, and criminal
injuries compensation resources.
Brand, S and Price, R, (2000) supra N. 2.
Mayhew, P (2003) supra N. 3
Supra N. 2
Not estimated – criminal injuries compensation payouts,
witness costs, miscarriages of justice, and offender and
his/her family.
Mayhew adopted the above UK methodology and estimated costs in three
main areas, namely medical costs, lost output and intangible costs, besides
the obvious costs of property stolen and damaged for individual offences. In
addition, some indicative overall costs were given for drug offences, fraud
and arson, but not the breakdown of the different types of cost for each of
these offences. Also included in the computation of total costs of crime
were the costs in dealing with crime, namely the costs of criminal justice
system, private security, household precautions, provisions for victims, and
insurance administration9.
This study adopts totally the above methodology of Mayhew and estimates
the various costs mentioned.
4.2.
Estimating the costs
4.2.1.
Medical costs
Medical costs relates to the costs of treatment in and outside hospital for
victims who sustained physical injury. They are applied to homicide cases
as well. Mental health costs are not included. Mayhew derived medical
costs from estimates taken from a thorough study by the Monash University
Accident Research Centre (MUARC) of the costs of deaths and injuries in
Victoria in 1993-94, one cause of which is interpersonal violence. MUARC
included medical costs for fatalities, hospitalization and non-hospitalization
cases. Such data or any equivalent figures are not available in Malaysia.
Hence the Australia estimates are used (with conversation into ringgit).
In order to take account of differences in price levels between the two
countries, the Australian values are converted into Malaysian ringgit using
the Purchasing Power Parities method10. Purchasing Power Parity
between Australia and Malaysia is the exchange rate that would be needed
to purchase the same quantity of goods and services costing A$1 in
Australia. Using the BigMac price index developed by The Economist,
about RM1.59 was equivalent to A$1 with price differences taken into
consideration.11
9
Insurance claims arising from crimes are treated as a transfer of resources. Potential victims
pay insurance premiums so their losses can be reclaimed in the event of crime, actual
victims with insurance receive recompense. Hence it is not considered a loss to society.
Assessment is made, though, of the costs to insurers of administering insurance claims.
10
Purchasing Power Parity conversion is preferred over exchange rate conversion as the latter
yields unreliable and misleading results. See International Comparison Program, The World
Bank Group, http://web.worldbank.org. This method was also used by Mayhew when
applying estimates of costs in the UK to Australia, supra N. 3.
11
1.59 is obtained by dividing the 2004 price of BigMac in Malaysia by that in Australia
(RM5.10/A$3.20) http://www.oanda.com/products/bigmac/bigmac.shtml.
4.2.2.
Lost output
Lost output counts the costs of victims not being able to work. It is what in
economic terminology is called human capital loss – commonly used in
Australia to cost accidents and disease. Both paid and unpaid work is
usually accounted for – that is, the lost production that a dead or injured
victim would have contributed, but in present value. Unpaid work losses
come from the imputed worth of household services and voluntary
community work. The value of potential lifetime work is translated back to
the year in which a death or injury occurred using a “social discount rate”.12
For violent crime, Mayhew used estimates from MUARC’s study. Whereas
for property crime with no injuries, he used UK estimates which were
derived from a question in the British Crime Survey (BCS) that asked
victims the amount of time they had to take off work. Again, as no
equivalent study or survey has ever been done in Malaysia, Mayhew’s
figures are used to estimate lost output suffered by local victims.
To account for the differences in income levels between the two countries,
the ratio of Australia – Malaysia monthly household incomes is used to
convert the Australian estimates into Malaysian values. For 2003-2004, the
official Australian household income was A$549 per week, or RM6920 per
month.13 And the average Malaysian household income was RM3377 per
month.14 Hence the Australia – Malaysia household income ratio is 2.05.
4.2.3.
Intangible costs
Intangible costs of crime (such as fear, pain, suffering and lost quality of
life) do not reflect any resource use, but are now usually included as a
legitimate cost to estimate. Nonetheless, estimates of intangible costs are
the most tenuous. Three main approaches to estimate them have been
taken in UK and US studies as follows:
i.
Estimation in terms of the amount of money individuals are willing
to pay to reduce risks (either of dying or avoiding harm), e.g. by
investing in safety gadgets or shifting to a ‘safer’ neighbourhood,
ii.
Measuring intangible losses through jury or court awards for noneconomic compensation to victims (or their survivors).
iii.
British Crime Survey approach, in which victims were asked to say
what their desired compensation would be to account for the
physical and emotional impact of what had happened.
In Mayhew’s study, intangible costs in violent crime were linked to figures
from compensation awards taken by Bureau of Transport Economics,
whereas for property crime, BCS figures on victim’s desired financial
compensation were adopted. In the absence of appropriate local data,
Mayhew’s figures are again converted into Malaysian currency using the
Purchasing Power Parity method.
12
13
14
Ibid, N. 3
Australia Bureau of Statistics, http://www.abs.gov.au
Projected from RM3011 in 2002 with annual growth rate of 5.9% (Statistical Year Book 2004,
Department of Statistics, Malaysia).
4.2.4.
Criminal justice system costs
A substantial amount of money is borne by the government in criminal
justice system, which comprises the police, the judiciary, public prosecutor,
prisons etc. Public records or media reports of expenditures of or
government allocations to these departments are taken at “face value” to
evaluate the costs of criminal justice system.
4.2.5.
Costs of victim assistance
Since there is neither victim support mechanism nor victim compensation
scheme in this country, this item is omitted in this study.
4.2.6.
Private security industry and household precautions
Non-availability of local information on expenditures in these areas calls for
the omission of the two items from costs of crime estimation.
4.2.7.
Insurance
Administrative costs for processing claims in criminal cases were included
in the UK, US and Australia studies. In Mayhew’s paper, such cost
amounted to 15 percent of the values of premiums. Unfortunately, similar
estimate could not be made for the Malaysian insurance industry due to
lack of data.
4.3.
Identifying types of crime
The scope of criminal activities is very wide. Though desirable, it is simply
impossible to include every types of crime in this kind of study, or any other
kind of study, for that matter. Brand and Price’s study focused on only the
notifiable offence categories (the types of offences that police forces record
and are required to report to the Home Office). This range of offences was
also considered in Mayhew’s work. Notifiable offences are rather similar to
index crimes of Malaysia, except for minor variation in nomenclature and
definition of individual offences. Hence it is decided that this study would
also focus on only the index crime offences. The advantage of doing so is
that it captures the majority of crimes that are likely to have the most severe
impacts, and makes the process of updating the figures and comparing
them with the volume of offences much simpler.15
In addition to the index crimes, some non-index crimes which tend to be
relatively less serious in nature but sometimes have grave consequences
are also included. These include drug offences, commercial crimes and
illegal immigrants.
15
“Index crimes” is defined as crimes that are generally serious in nature, occur with sufficient
frequency and would most likely be reported to the police. The number of reported index
crimes is used as an indicator of the general crime situation in the country, hence its record
is always well maintained and constantly updated.
4.4.
Counting the number of crimes
In order to assess the full impact of crime, it is necessary to estimate the
actual number of crimes that occur rather than the number of crime
recorded by the police. It is a well established fact that a good percentage
of crimes go unreported for various reasons, which make up the “dark
figures” of crimes. Mayhew inflated his crime figures with “multipliers” which
were obtained from estimates of actual crime incidences via crime surveys
conducted both in Australia16 and UK17. Since no victimization surveys have
ever been conducted n Malaysia, this study makes use of the multipliers in
Mayhew’s paper to estimate the actual crime incidence in Malaysia.
5.
THE COSTS OF CRIME IN AUSTRALIA
Mayhew’s study produced estimates of the costs of crime in Australia for
the year 2001 as depicted in the following tables. Table 1 shows the
number of officially recorded crimes, and the corresponding estimated
actual number of crimes. The “multipliers” were either derived from the
Australian Crime and Safety Survey (CSS) or based on UK estimates.
Table 2 shows the estimates of various costs per crime. These costs were
summed to an overall average cost, which estimates the cost of one
incident of each crime. The total costs, obtained by multiplying average
costs with estimated number of actual incidents (Table 1), estimate the total
impacts of each type of crime in economic terms. Table 3 lists down the
total costs according to various categories. The total costs of crime in
Australia for the year 2001 was estimated at about A$32 billion.
Table 1: estimated number of crimes, 2001 (Australia)
Recorded
16
Multiplier on
crime, 2001
recorded
(000s)
offences
Source of
1
Multiplier
Estimated
number of
actual incidents
For each crime a “multiplier” is constructed which is the ratio between the survey-estimated
number of crimes in 1997-1998 and the number recorded by the police over the same
period (with adjustment made to improve comparability).
17
UK “multipliers” were calculated based on 1997 British Crime Survey and police recorded
figures.
2001 (000s)
Homicide
0.6
Assault
1.0
none
0.6
810
152
5.3
CSS (1998)
Sexual assault
17
5.6
CSS (1998)
93
Robbery
27
6.3
CSS (1998)
168
Residential burglary
275
3.0
CSS (1998)
819
Non-residential burglary
160
1.1
estimate
176
Theft of motor vehicles
140
1.1
CSS (1998)
147
Shoplifting
73
100.0
UK estimates
Theft from motor vehicles
266
3.6
UK estimates
7,304
956
Other theft and handling
390
4.5
UK estimates
1,769
Criminal damage
319
6.0
UK estimates
1,914
TOTAL
1,820
14,160
Note:
1
CSS = Crime and Safety Survey Australia (Australia Bureau of Statistics 1999). UK
estimates based on Brand and Price (2000).
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Table 2: Summary of average and total cost estimates (Australia)
UNIT COSTS
Property
stolen and
damaged
(A$)
-
Medical
costs
(A$)
7,600
200
200
Lost
output
(A$)
1,190,000
700
1,100
Intangible
costs
(A$)
380,000
800
1,200
Average
costs
(A$)
1,600,000
1,800
2,500
Homicide
Assault
Sexual
assault
Robbery
800
300
1,000
1,500
2
Residential
1,100
n.e.
100
800
burglary
Non-res.
2,400
n.e.
1,200
800
burglary
Theft of motor
4,000
n.e.
700
1,300
vehicles
Shoplifting
100
n.e.
10
n.e.
Theft from
270
n.e.
20
260
m/vehicles
Other theft &
200
n.e.
10
150
handling
Criminal
350
n.e.
50
300
damage
Arson
3
Drugs (n.e.i.)
Fraud
TOTAL
LOSSES
(A$m)
Note:
1
The estimated number of actual incidents for each crime is shown in Table 1.
2
n.e. = not estimated
3
n.e.i. = not elsewhere included
4
figures may not sum to total due to rounding
TOTAL
COSTS
1
(A$m)
930
1,440
230
3,600
2,000
600
1,650
4,500
790
6,000
880
110
550
810
530
360
640
700
1,340
1,350
1,960
5,880
19,030
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Table 3: Total costs (Australia)
A$ million
Costs in dealing with crime
Criminal justice system
Private security industry
Household precaution
Provision for victim
Insurance administrative costs
Sob-total
Total
A$ million
6,400
3,140
1,830
880
500
12,750
Crime costs
Property loss
Medical costs
Lost output
Intangible losses
Arson
Drugs (not elsewhere included)
Fraud
Sub-total
TOTAL
4,070
250
2,180
3,320
1,350
1,960
5,880
19,030
31,780
Note: Figures may not sum to total due to rounding
6.
COSTS OF CRIME IN MALAYSIA
Using Mayhew’s format above, the various costs of crime in Malaysia are
estimated. Malaysian statistics are used as far as they are obtainable.
Otherwise, Australian figures quoted by Mayhew are used, with necessary
adjustment made wherever possible and suitable. Cost of criminal damage
is omitted since it is not an index crime in Malaysia. So is cost of arson.
Besides, there are very few criminal arson cases here. Likewise, certain
costs in dealing with crime have to be omitted either because the relevant
data are not available (private security and household precaution)18, or it is
not applicable in Malaysia (provision for victims). The following tables show
the estimates of the various costs of crime in Malaysia.
Table 4: estimated number of crimes in Malaysia, 2004
Recorded
crime,
18
Multiplier on
recorded
Estimated number
of actual incidents
Australian figures for these items are not used as it is believed that the differences between
the relevant expenditures in the two countries are too great.
20041
MURDER
ROBBERY
RAPE
ASSAULT
offences2
2004
565
1.0
565
15,288
6.3
96,314
1,718
5.6
9,621
4,288
5.3
22,726
HOUSE BREAKING
24,904
3.0
74,712
VEHICLE THEFT
65,076
1.1
71,584
OTHER THEFT
44,616
13.83
615,701
TOTAL
156,455
891,223
Note:
1
Source: URJ, Bukit Aman.
2
Multipliers are based on Mayhew (2003), see Table 1 above.
3
Shoplifting, theft from motor vehicles and other theft and handling (as in Australia) are
lumped into one common category of “Other Theft” in Malaysia. Hence the corresponding
multiplier (13.8) is calculated by dividing the total number of estimated incidents by total
recorded crime of these three offences in Australia (7304 + 956 + 1769) / (73 + 266 +
390).
Table 5: Summary of average and total cost estimates (Malaysia)
UNIT COSTS
Property
stolen and
damaged
(RM)
MURDER
ROBBERY
RAPE
ASSAULT
HOUSE
5
BREAKING
VEHICLE
THEFT
OTHER
7
THEFT
COMM.
8
CRIMES
DRUGS
ILLEGAL
IMMIGRANT
TOTAL
LOSSES
(RM m)
14,505
4
17,974
4
10,637
6
Medical
1
costs
(RM)
12,112
478
319
319
n.e.
Lost
2
output
(RM)
Intangible
1
costs
(RM)
Average
costs
(RM)
TOTAL
COSTS
3
(RM m)
1,707,317
1,435
1,578
1,004
605,625
2,391
1,912
1,275
2,325,054
18,809
3,809
2,598
1,314
1,812
37
59
723
1,275
19,972
1,492
1,004
2,072
13,713
982
20
279
5,195
3,199
n.e.
n.e.
4,896
4
9
1,170
2,13410
12
11
12,209
Notes:
1
Australian costs (Mayhew 2003) are converted into Malaysian currency using the
Purchasing Power Parity (BigMac prices) conversion method developed by The
Economist, where about RM1.59 is needed to purchase the same quality of goods and
19
services costing A$1 in Australia.
19
1.59 is obtained by dividing the 2004 price of BigMac in Malaysia by that in Australia
(RM5.10/A$3.20) http://www.oanda.com/products/bigmac/bigmac.shtml. See also
International Comparison Program, The World Bank Group, http://web.worldbank.org
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2
3
4
5
6
7
8
9
10
Lost output is estimated by multiplying the Australian figures with the ratio of Australia –
20
Malaysia monthly household incomes (=2.05).
Figures may not sum to total due to rounding
Average losses of all types of robbery, house breaking and other theft cases in the
Kuala Lumpur Contingent are used because the national figures for these items are not
maintained by URJ Bukit Aman.
House breaking includes both residential and non-residential burglary (as in Australia).
Hence the estimates of lost output and intangible losses are the overall mean costs of
these two offences.
Source: URJ, Bukit Aman.
Shoplifting, theft from motor vehicles and other theft and handling (as in Australia) are
lumped into one common category of “Other Theft” in Malaysia. Hence the
corresponding estimates of lost output and intangible losses are the overall mean costs
of these two offences.
Source: Commercial Crime Investigation Department, Bukit Aman. Total loss for
Commercial Crime 2004 was RM836,290,293. This amount was inflated by 40% to
account for the loss output and intangible losses (Mayhew 2003).
Estimated RM2 billion for purchase of illicit drugs (Utusan Malaysia 17/11/2004) plus
RM134 million total expenditure for prevention and rehabilitation in 2004 (Maklumat
Dadah 2004, Agensi Antidadah Kebangsaan).
RM9.3 mil for development and management of Immigration detention centres
(http://www.malaysia-today.net) and RM2.3 mil for deportation of illegal immigrants
(Utusan Malaysia 10/9/2004).
Table 6: Total costs, Malaysia
Total
RM million
(RM million)
1
Criminal justice system costs
Police
Prison
Malaysia Crime Prevention Foundation
Sob-total
Crime costs
Property loss
Medical costs
Lost output
Intangible losses
Commercial Crimes
Drugs
Illegal Immigrants
Sub-total
TOTAL
Notes:
1.
2.
3.
4.
20
2,9002
2493
14
3,150
6,516
63
1,279
1,035
1,170
2,134
12
12,209
15,359
Expenditures of other agencies like the courts, prosecution, etc are not obtainable
Source: Logistics Department, Bukit Aman.
Source: Laporan Tahunan 2003, Jabatan Penjara
Source: Laporan Tahunan 2004, Malaysia Crime Prevention Foundation
2003-2004 Australia household income was A$549 per week (or RM6920 per month)
(Source: Australia Bureau of Statistics, http://www.abs.gov.au.) 2004 Malaysia household
income was RM3377 per month, projected from RM3011 in 2002 with annual growth rate of
5.9%. (Source: Statistical Year Book 2004, Department of Statistics, Malaysia)
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5.
Figures may not sum to total due to rounding
6.1.
Murder
“Murder” includes murder under s.302 of the Penal Code (PC) and culpable
homicide under s.304 & 304A PC. Attempted murder under s.307 PC is
grouped under the category of assault following the methodology of
Mayhew. It is assumed that every murder case is brought to the attention of
the police and duly investigated. Hence the number of reported cases, 565
for year 2004, is not inflated. Mayhew’s Australian estimates are taken as
the guide for medical costs, lost output and intangible costs. While lost
output are converted to Malaysian value by multiplying the Australian
figures with the ratio of Australia – Malaysia monthly household incomes,
medical and intangible costs are converted by taking into consideration the
Purchasing Power Parities between the two countries.
The medical costs of murder are RM12,112 per case. The cost for lost
output is substantial, at about RM1.7 million per murder, while the intangible
cost is about RM606 million. The overall costs of murder for the year 2004
are about RM6.8 million (medical), RM965 million (lost output), and RM342
million (intangible costs). This gives a total cost of RM1,314 million, or
about RM2.3 million per murder case.
Total for murder:
RM1,314 million (overall)
RM2.3 million per murder.
6.2.
Robbery
All robbery offences, either gang robbery or otherwise, committed with or
without firearms, are lumped into this category. 15,288 robbery cases were
reported in 2004. Inflated with multiplier 6.3, the estimated actual robbery
incidents are 96,314. As Unit Risikan Jenayah21 (URJ) Bukit Aman does not
maintain the statistics of losses in robbery cases, Kuala Lumpur contingent
figures were used for estimation. Average loss for robbery cases in KL was
RM14,505 for year 200422. Applying this average at national level, the
estimated total property loss for robbery is about RM1.4 billion. Adopting
the estimates of Mayhew, total medical costs associated with robberies
stands at RM46 million, or RM478 per case. Lost output adds another
RM1,435 per case, or RM138 million overall. Intangible losses are higher
still, amounting to RM2,391 per incident, or just over RM230 million overall.
In sum, the estimate of the costs of robbery is RM1,812 million overall, with
an average of RM18,809 per robbery.
Total for robbery:
21
22
Criminal Intelligence Unit
A total of 3,005 robberies were reported in KL in year 2004 with a total loss of
RM43,587,973.57. (Source: URJ Kuala Lumpur).
RM1,812 million (overall)
RM18,809 per robbery
6.3.
Rape
“Rape” is taken as the Malaysian equivalent of sexual assault in Australia.
In 2004, the officially recorded figure was 1,718. Multiplied by a factor of 5.6
for unreported cases, the total estimated total incidents are 9,621.
Adopting Mayhew’s estimates, medical costs arising from rape average
RM319 per case, giving an overall total of just over RM3 million. Lost output
is about RM1,578 per incident, or RM15 million overall. The intangible loss
is estimated at RM1,912 averaged across all incidents, and about RM18
million in total. These costs sum up to a total of about RM37 million overall,
or RM3,809 per case.
Total for rape:
RM37 million (overall)
RM3,809 per rape case
6.4.
Assault
“Assault” refers to the offences of voluntarily causing hurt under s.324, 325
and 326 PC, and also encompasses attempted murder under s.307 PC. A
total of 4,288 cases of assault were investigated in 2004. Multiply this with
5.3 to account for the “dark figures”, the estimated actual number of assault
incidents is 22,726. No property damage or loss is associated with assault.
Medical bills for assault victims cost about RM7.2 million in total, or RM319
per victim. It is estimated that each victim suffers lost output of RM1,004,
giving an overall total of just under RM23 million. Further, intangible losses
add another RM29 million to the total costs, or RM1,275 per assault. To
sum it up, the total cost of assault is estimated at RM59 million, averaging
RM2,598 per case.
Total for assault:
RM59 million (overall)
RM2,598 per assault
6.5.
House breaking
The Royal Malaysia Police crime statistics do not differentiate residential
burglary from non-residential burglary. Accordingly, estimates of multiplier
and various costs were modified by taking the average values of those two
offences in Mayhew’s tables. In this study too, “house breaking”
encompasses house breaking by both day and night. Officially, 24,904
cases were recorded. With multiplier of 3.0, the estimated total house
breaking incidents triples to 74,712. Using the Kuala Lumpur contingent
statistics, an average of RM17,974 worth of properties are stolen from each
burglarised building23. Multiplying this average with 74,712 cases
nationwide, the total property stolen amounts to RM1,343 million. Adopting
Mayhew’s estimated figures, the total lost output bill for house breaking
victims is RM54 million, or RM723 per case. Intangible losses add another
RM95 million overall, or RM1,275 per case. No medical cost could be
assessed. Hence, the total cost of house breaking is RM1,492 million, or
RM19,972 per case.
Total for house breaking:
RM1,492 million (overall)
RM19,972 per house breaking
6.6.
Vehicle theft
“Vehicle theft” includes theft of all types of motor vehicle – cars,
motorcycles, lorries, vans, etc. Most of the vehicle theft cases are reported
to the police for insurance purpose. Hence the multiplier is only 1.1. This
makes the estimated actual number of vehicle stolen become 71,548, from
the reported 65,076 cases. URJ Bukit Aman record shows that average
value of stolen vehicle is RM10,673, and overall total loss RM761 million.
No medical cost is estimated. Lost output averages RM1,004 per stolen
vehicle, or nearly RM72 million overall. Intangible cost associated with
vehicle theft stands at RM2,072 per case, or RM148 million overall. All told,
then, the estimate of the total cost of vehicle theft is RM982 million overall,
or RM13,713 per stolen vehicle.
Total for vehicle theft:
RM982 million (overall)
RM13,713 per vehicle theft
6.7.
Other theft
“Other theft” encompasses all theft cases excluding house breaking and
vehicle theft. The multipliers for shoplifting, theft from vehicles and other
theft and handling in Mayhew’s estimates (Table 1) are averaged to
produce an overall mean of 13.8. The multiplier for general theft is
expectedly high as it is widely accepted that a lot of cases went unreported.
Officially 44,616 thefts were recorded, and thus it is estimated that actually
615,701 cases have taken place. Again, the KL contingent statistics for
property losses have to be used. Accordingly, value of properties stolen in
“other theft” cases averages RM4,89624 per case, giving a nation-wide total
of just over RM3 billion. Medical costs could not be assessed for this
category of offence, whilst lost output is estimated at RM20 per incident, or
RM12 million overall. Intangible losses added RM172 million to the overall
total, or RM279 per case. In sum, other theft impose a total cost of about
RM3.2 billion overall, or RM5,195 per case.
23
24
A total of 2192 house breaking cases were reported in KL in year 2004 with a total loss of
RM39,398,454.72. (Source: URJ Kuala Lumpur).
A total of 6381 other theft cases were reported in KL in year 2004 with a total loss of
RM31,243,158.52. (Source: URJ Kuala Lumpur).
Total for other theft:
RM3.2 billion (overall)
RM5,195 per other theft
6.8.
Commercial Crimes
All types of cases investigated by the Commercial Crime Investigation
Department (CCID) of Royal Malaysia Police are included in this category.
CCID statistics show that total monetary loss for all commercial crime cases
in 2004 was RM836,290,293. This amount was inflated by 40% to account
for the lost output and intangible losses (Mayhew) to give an overall
estimated cost of RM1,170 million.
6.9.
Drug offences
Only two types of costs could be accounted for in this study. It was
estimated by the National Drug Agency that about RM2 billion is spent by
addict to purchase illicit drugs annually.25 Total expenditure for prevention
and rehabilitation incurred by the Agency in 2004 amounts to RM134
million26. The total cost of drug offences is thus estimated at RM2,134
million. Other costs like deaths due to drug dependence, lost productivity of
addicts, and medical treatment for diseases associated with drug abuse
(e.g. HIV/AIDS) could not be estimated due to lack of data, though it is
believed that the total amount is substantial.
6.10.
Illegal immigrants
The country incurs a substantial amount of costs in dealing with the
problem of illegal immigrants. Hence this item is included. Deputy Internal
Security Minister reported that RM9.3 million was spent for the development
and management of immigration detention centres27, whilst the Home
Affairs Minister said that RM2.3 million was spent to deport the
immigrants28. Other costs like the loss of employment by local workers and
remittance of money by these immigrants to their countries of origin are not
estimated. Nevertheless, it is believed that these losses are offset by the
economic gains brought by the immigrants as they are the source of cheap
labour that help develop our economy.
6.11.
25
OVERALL CRIME COSTS
Utusan Malaysia, 17 Nov 2004
Maklumat Dadah 2004, Agensi Dadah Kebangsaan.
http://www.malaysia-today.net/parlimen/2004, 29 Nov 2004
28
Utusan Malaysia, 10 Sept 2004.
26
27
It has not been able to assess the different elements of costs for different
offences in quite the same way. For instance, medical costs were not
assessed for some offences, and average unit costs could not be assessed
for commercial crime, drugs and illegal immigrants.
This said, other theft carries the largest bill – over one-quarter of the total
(figure 1). This is followed by drug offences and robbery which contribute to
17% and 15% of the total costs respectively. Other major contributors are
house breaking (12%), murder (11%), commercial crime (10%) and vehicle
theft (8%).
Figure 1: Different crimes as a proportion of total costs
ILLEGAL IMMIGRANT
0.10%
DRUGS
17.48%
MURDER
10.76%
ROBBERY
14.84%
COMM. CRIMES
9.58%
RAPE
0.30%
ASSAULT
0.48%
HOUSE BREAKING
12.22%
OTHER THEFT
26.20%
VEHICLE THEFT
8.04%
Not surprisingly, the most costly crime per incident is murder, with a unit
cost of RM2.3 million. Among the other crimes (and bearing in mind
commercial crime, drugs and illegal immigrants are omitted here), the most
costly per incident, on average, is house breaking, followed by robbery and
vehicle theft (figure 2).
Figure 2: Average cost per incident (excluding murder, commercial crime,
drugs and illegal immigrants)
HOUSE BREAKING
19,972
18,809
ROBBERY
VEHICLE THEFT
13,713
5,195
OTHER THEFT
RAPE
3,809
2,598
ASSAULT
0
5,000
10,000
15,000
20,000
25,000
RM
6.12.
Other costs
As well as the costs identified above, there are considerable costs borne by
the criminal justice system. The main cost is the police expenditure.
According to the Logistics Department of RMP, RM2.9 billion was allocated
to the police in 2004. The prison department spent RM249 million in the
same year.29 The only NGO whose expenditure on crime prevention could
be obtained was the Malaysian Crime Prevention Foundation, it spent
nearly RM1 million for their programmes in 2004.30 The total accounted for
criminal justice cost is RM3,150 million.
Costs borne by other agencies in the criminal justice system could not be
obtained; they include the judiciary, the Public Prosecutor’s office, welfare
department etc. The same goes to other NGOs that deal with crime
prevention or providing support to crime victims. Expenditures on private
security industry and household precaution by potential victims in
anticipation of crime are also not available. Finally, estimates of insurance
administrative costs in processing claims for criminal cases could not be
done either, due to lack of information. It can thus be concluded that a good
portion of criminal justice costs has not been accounted for in this study.
6.13.
Full costs in summary
Table 6 shows the costs of crime in full. The total crime costs is over RM12
billion, while the total bill amounts to over RM15 billion. This is RM600 per
person per year in Malaysia.
7.
CONCLUSION AND COMMENTS
29
30
Laporan Tahunan 2003, Jabatan Penjara.
Laporan Tahunan 2004, MCPF
The full impact of crime on society cannot be assessed by just counting the
number of offences committed. Even the official records of monetary or
property losses in crimes comprise only a fraction of the total cost of crime.
A costs of crime estimate helps us to realise more explicitly the extent of
harm caused by criminals to our society. This study breaks new ground in
quantifying the various consequences of crime in Malaysia. The estimates
made here are by no means accurate or complete. Nevertheless they give
a rough idea of how much we are paying for the misdemeanour of the lawbreakers.
The results in this study should be treated judiciously because of the
following shortcomings:
•
Estimating methodologies adopted from the Australia or UK
model might not suit local situations.
•
Due to the lack of relevant local data, Australian data and
estimates are used as substitutes with some modifications.
Hence it has to be assumed that the impacts of crime are the
same in Australia as in Malaysia. When cost estimates (e.g.
medical and intangible costs) are adopted, it is assumed that
Australians and Malaysians have similar lifestyle and standard
of living, and evaluate suffering of crime similarly. The use of
UK/Australia “multipliers” in estimating the actual number of
crimes is accompanied with the assumption that Malaysia has
the same proportions of unreported crimes. It has further to be
assumed that the profiles of crimes in the three countries are
similar. The cost estimates are thus sensitive to these
assumptions.
•
Differences in classification, nomenclature and definitions of the
various crimes between Malaysia, Australia and UK might
result in some discrepancies in costing. For instance, the scope
of sexual assault as in Australia is wider than rape as in
Malaysia.
•
No crime surveys or any other related research have been
done in Malaysia as in UK or Australia. These surveys (e.g.
Crime and Safety Survey and MUARC study) provide abundant
information and data for costing and form the basis of
estimation in many areas.
•
Criminal justice system costs are poorly estimated due to lack
of data. Many agencies are not represented in the costing.
•
Costs in anticipation of crimes (security industry and household
precautions) are totally omitted as no local data is available.
Insurance administrative costs are also not included for the
same reason. It is believed that the sums could be quite
substantial.
In view that many costs could not be included in this study, it can be safely
concluded that the total costs of crime in Malaysia amounts to much more
than RM15 billion as estimated in this study.