Economic Impact of Violence
Violence exacts an extraordinary economic toll.
Costs of Violence
Estimates of the costs of violence vary broadly, with many of the differences resulting from the inclusion or exclusion of different categories. Cost categories can be broadly grouped into direct costs, which result directly from acts of violence or attempts to prevent them, and indirect costs, which include the opportunity cost of time, lost productivity, and impaired quality of life.
Those and other methodological issues lead to differing estimates of the costs of violence.2 Researchers have calculated the value of a human life using lost wages, estimates of the quality of life, wage premiums for risky jobs, willingness to pay for safety measures, and individual behavior related to safety measures. The value of human life used in U.S. studies ranges from US$3.1 million to US$6.8 million (Fisher, Chestnut, and Violette 1989; Viscusi 1993; additional sources online). The rate used to discount future costs and benefits also varies, generally from 2 to 10 percent.3
Fromm (2001) reviews a variety of sources and calculates an aggregate total of US$94 billion in annual costs to the U.S. economy resulting from child abuse, which is equal to 1 percent of gross domestic product (GDP). The estimate includes direct medical costs and related costs of legal services, policing, and incarceration, as well as the value of indirect productivity losses, psychological costs, and future criminality. Using secondary sources, Courtney (1999) calculates direct costs of US$14 billion, including counseling and child welfare services, resulting from child abuse in the United States.
The Centers for Disease Control and Prevention (CDC 2003) cite an estimated 5.3 million victimizations involving intimate partner violence each year in the United States among women 18 and older, resulting in nearly 2 million injuries. More than 550,000 of those injuries require medical attention. The costs of intimate partner violence, including medical care, mental health care, and lost productivity, exceed US$5.8 billion annually.
As a percentage of GDP, estimates of the costs of intimate partner violence are considerably higher in LMICs than in high-income countries. Morrison and Orlando (1999) calculate the costs of domestic violence against women on the basis of stratified random samples of women. Using only the lost productive capacity of the women, they extrapolate total costs of US$1.73 billion in Chile and US$32.7 million in Nicaragua. In a subsequent publication, Buvinic and Morrison (1999) calculate that the direct medical costs plus lost productivity are equivalent to 2.0 percent of GDP in Chile and 1.6 percent of GDP in Nicaragua.
Several studies have used the U.S. National Crime Victimization Survey, an annual survey based on 100,000 interviews with crime victims, to estimate the incidence and calculate the direct costs of sexual assault. For example, Miller, Cohen, and Rossman (1993) calculate average psychological costs of US$66,600 for each rape and total costs of US$85,000 for sexual assault resulting in physical injury. Psychological costs, also referred to as "pain and suffering," are considered indirect costs. Because many studies do not include those types of costs, cost estimates vary widely.
Violence at the workplace also extracts an economic toll, but studies of its magnitude are not well developed and are hampered by measurement difficulties and nonstandardized methodologies. Biddle and Hartley (2002) study homicides in the workplace in the United States and calculate an annual cost of approximately US$970 million. An international report commissioned by the International Labour Organization on the costs of violence and stress in work environments estimates that losses from stress and violence at work are equivalent to 1.0 to 3.5 percent of GDP over a range of countries (Hoel, Sparks, and Cooper 2001). All those studies use a broad definition of workplace violence, including psychological violence such as sexual harassment and bullying.
Violence committed by juveniles is particularly costly to society. Miller's (2001) analysis of violent crimes committed in Pennsylvania in 1993 finds that juvenile violence accounted for 24.7 percent of all violent crimes and 46.6 percent of total victim costs from violent crime. Cohen (1988) calculates that the total cost to society of a youth engaging in a life of crime ranges from US$1.9 million to US$2.6 million.
Proximate Risk Factors
Alcohol, drugs, and guns contribute to the costs of interpersonal violence. According to estimates by the Children's Safety Network Economics and Insurance Resource Center (1997), the cost of violent crime committed under the influence of alcohol equaled US$33.3 million in 1995, or 8.3 percent of the cost of all violent crime in the United States. The National Crime Prevention Council (1999) estimates that the cost of all drug-related crime, including productivity costs, amounts to US$60 billion to US$100 billion annually in the United States, with violent crime accounting for approximately 10 percent of this figure.
Cook and Ludwig (2000) estimate that the annual costs of gun violence in the United States are on the order of US$100 billion. Miller and Cohen (1997) calculate a significantly higher estimate for the toll of gun-related violence in the United States: US$155 billion (including psychological costs and the value of quality of life). They also calculate that, on a per capita basis, the cost of gun violence in Canada equals one-third of the U.S. cost. Peden and van der Spuy's (1998) study at the Groote Schurr Hospital in Cape Town, South Africa, finds that direct medical costs averaged R 30,628 (US$10,308) per gunshot victim.
Effects on Public Finances
The public sector (and thus society in general) bears many of the costs of interpersonal violence. Several studies (Klein and others 1999; Payne and others 1993; additional sources online) find that 56 to 80 percent of U.S. health care costs for stabbing and gun injuries are either directly paid by public financing or are not paid at all. In the latter case, government and society absorb the costs in the form of uncompensated care financing and overall higher payment rates. In LMICs, society likely also absorbs the costs of violence through direct public expenditures and negative effects on investment and economic growth.
