Fighting Crime through Treatment: The Effect of Treatment for Substance Use Disorder on Crime

Contemporary criminological theories suggest that substance use is one of the root causes of crime. If there is a structural relationship running from substance use to crime, interventions to reduce substance use should also have potentials for reducing crime. This paper explores an area that has garnered relatively little attention in the economic literature, namely treatment for substance use disorder (SUD). Our study examine the reduced-form effect of increasing access to SUD treatment on reducing crimes, assuming that this effect comes largely from the structural effect through reducing substance use.

We use annual, county-level panels of SUD treatment and crime data between 2001 and 2008 across the United States. Data sources include the Uniform Crime Reports (UCR), the National Survey of Substance Abuse Treatment Services (N-SSATS), and the Area Resource File (ARF). County-level crime rate was measured as the number of crimes reported to the police of all law enforcement agencies per 100 county residents. Eight Part I crime categories are available in the UCR, including four violent crimes and four property crimes. County-level SUD treatment rate was measured as the number of treatment entries into specialty SUD treatment facilities per 100 county residents. N-SSATS covers almost all known specialty SUD treatment facilities in the United States.

To address the potential endogeneity of SUD treatment rate, we use two-way (county and year) fixed-effect to isolate the within-county variations in crime rates over time. We further exploit the exogenous variation in treatment rates induced by two state-level policies, namely Medicaid expansions under the Health Insurance Flexibility and Accountability (HIFA) waivers and SUD parity mandates in private group health plans. The effect of the SUD treatment rate on crime rates was estimated using two-stage least squares (TSLS ) with two-way fixed-effect in both stages.

The TSLS estimates indicate that a one percent point increase in SUD treatment rate reduced the aggravated assault rate by 0.15 percent points, and reduced the larceny theft rate by 0.45 percent points, implying that a 10 percent relative increase in SUD treatment rate reduced the aggravate assault rate by a relative 5 percent and reduced the larceny theft rate by a relative 3 percent. These estimates are robust to an alternative county-level analysis on an unbalanced panel consisting of all 23,537 non-missing observations of 3,016 counties over an average of 7.8 years, and Core-Based Statistical Area (CBSA)-level analyses that aggregate the data to the level of metropolitan and micropolitan statistical areas. This suggests that a 10 percent relative increase in SUD treatment rate at an average cost of $1.6 billion can yield an average benefit of $3.5 billion to $5.4 billion from reducing crime. The benefit-cost ratio of SUD treatment with respect to crime reduction is about 2.2 to 3.5.

Study findings suggest that improving access to SUD treatment can effectively and cost-effectively promote public safety. Furthermore, expanding insurance coverage for SUD treatment (e.g., through Medicaid expansions and parity mandates) can be an effective regulatory policy to achieve this improvement in access.