Gun Violence's Impact on Business

This blog is a part of our series, "Perspectives in Crime" where we explore leading academic studies that touch on crime data.

Criminology literature is frequently concerned with secondary and tertiary costs of local crime. A recent paper published in the journal of Crime Science adds to this discussion by focusing on the impacts of gunshots on local business activity. The paper “The Impact of Gunshots on Place-level Business Activity”, written by Christina Stacy, Yasemin Irvin-Erickson and Emily Tiry, analyzes block-level gunshot data through the Washington, D.C. area. The study examined the impact of gunshots on local businesses, focusing on the number of employees, total sales, and business “births” and “deaths” (i.e. the opening and closures of businesses).

Gunshot data around Washington, D.C.

Researchers analyzed gunshot data in the Washington, D.C. area from 2010 through 2012, using gunshot detection technology (GDT), acoustic sensors dispersed throughout the city that identify the sound of gunshots, triangulate the location, and report to law enforcement. During the study period, GDT sensors covered about 25% of the total area of Washington, D.C.

Data quantifying business impacts were provided by the National Establishment Time Series Database, maintained by Dun and Bradstreet, a financial risk management and credit scoring company. The datasets included information on industry, location, sales, and number of employees for each business. The study limited analysis to service industries, which included retail, accommodation and food services, and personal and household goods repair and maintenance services. During the study period, approximately 25% of these businesses were located in the quarter of Washington, D.C. covered by GDT.

Further, Stacy et al. limited analysis to establishments located at least 1,000 feet within the GDT coverage area to ensure consistency. They geocoded each establishment and recorded total sales and employees, as well as establishment births and deaths from 2010 through 2012. A birth was defined as any establishment that did not exist at a defined location in the prior year, and a death was defined as an establishment that did not exist at the same location in subsequent years. If an establishment moved locations (i.e. to a new census block), it was counted as both a death and a birth.

The effects of gunshots on local businesses

In their analysis, Stacy et al. found an increase in gunshots produced a decline in the number of service and retail businesses. Gunshots within 500 feet of a block modestly decreased the total number of businesses, employees, and sales.

To determine whether gunshots in direct proximity to businesses were displacing sales into nearby areas, the research team ran a spatial lag model, analyzing the relationship between gunshots and business outcomes within 500 feet, as well as 500-1000 feet.

Their results show gunshots in both ranges were associated with business deaths. Their model suggests that an additional gunshot between 500 and 1,000 feet away increased business death in a census block by 4.3%.

Stacy et al. noted that the largest distance a gunshot can be heard indoors is 1,000 feet. However, the results of their model suggest that the impact of gunshots on the neighborhood level reached further than the audible distance.

Stacy et al. hypothesized that neighborhoods with regularly occurring gunshots may experience smaller effects from each gunshot, whereas neighborhoods with a low level of gunshots might experience a much stronger effect from additional gunshot events. To investigate this, they analyzed the relationship between commercial revenues and the initial gunshot levels recorded in 2010.

This analysis appeared to confirm their hypothesis. In the neighborhoods with the lowest initial levels of gunshots, one additional gunshot was associated with a 0.5% reduction in total establishments and a reduction of business births by 9.4%.

Underprivileged communities often face elevated rates of violence. This study provides some insight into the relationship between gun violence in urban communities and how gun violence hinders economic growth. Using Gun Detection Technology (GDT), Stacy et al. found support that the prevalence of local gunshots has a negative and significant effect on local retail and service-oriented businesses, limiting both profits for local business owners and employment opportunities for residents. This ultimately results in negative pressure in terms of new entrepreneurship and local growth. The study also highlights the economic benefits of choosing locations away from high-crime neighborhoods.

For up-to-date information on violent crime in your neighborhood, talk to us about the Pinkerton Crime Index.