Thread by @mikemakowsky

New (accepted!) paper and thread: “To Serve and Collect: The Fiscal and Racial Determinants of Law Enforcement” by myself, Thomas Stratmann, and @ATabarrok, forthcoming in the Journal of Legal Studies 1/17
papers.ssrn.com/sol3/papers.cf…

Punchline: when local governments are running budget deficits, black and Hispanic arrest rates increase, while white arrests remain (mostly) unchanged, *but only if* local police are legally able to retain forfeiture revenues in their budget 2/17

To better understand our results, I’d like to walk through two important *correlations* first, and then our discuss our strategy for identifying a *causal* relationship between fiscal incentives and arrests 3/17

Correlations: 1) Local government fine and forfeiture (F&F) revenue increases more with drug arrests than other types of arrests (not surprising, drug exchanges require cash), 2) F&F revenue increases faster with black and Hispanic drug arrests than white drug arrests🤔. 4/17

The positive correlations between drug arrests and fine and forfeiture revenues, especially for black and Hispanic drug arrests, show that police departments have the motive and opportunity for revenue driven law enforcement 5/17

What about means? There are only so many murders/robbery arrests to make. Drug arrests, however, are more of a police choice variable, able to be ramped up almost at will. Thus, in addition to motive & opportunity, police also have the means for revenue driven enforcement 6/19

Potential explanations: different types of drug crime, racial bias in arrest category/fines/bail, rates of guilty pleas, sentence bargaining, charge reductions, reliance on public defenders, and the economic & racial determinants of successfully challenging at trial 7/17

See nber.org/papers/w24579 by @amandayagan, Freedman, & Owens, or scholar.harvard.edu/files/cyang/fi… by Arnold, Dobbie, and Yang, for related work. Lots more cited in the paper! 8/17

Regardless of the source(s) of these differentials, they point towards important differences in police incentives. To tell a causal story, however, we need variation in these incentives. Our ID strategy leverages laws that allow police to retain $$ from seized property 9/17

The catch: seizure laws are not randomly assigned. States with larger black populations are more likely to allow their police to retain seizure revenue🤔. 10/17

Solution: budget deficits. Specifically, we include the effect of seizure laws and local budget deficits in our regressions, and then identify off of the interaction of the two i.e. the marginal impact of additional budget deficit in states where seizure revenue is retained 11/17

We find in states where seizure revenues are retained i) black and Hispanic arrests for drugs, DUI, and prostitution arrests are all increasing with local govt deficits. ii) white arrests for drugs and DUI are *entirely insensitive* 12/17

Side note, iii) black, Hispanic, & white prostitution arrests are all increasing w/ deficits (where seizure $$ are retained) at a similar rate. Prostitution arrests are *far* less numerous than drug or DUI arrests, but it’s still interesting (is this surprising @causalinf?) 13/17

Similarly, we find that the rate of property seizures from blacks and Hispanics are both increasing with deficits in states where police can retain revenues 14/17

While white arrest rates are largely unchanged, we do observe increases in the rate of seizures from whites (the magnitudes are 50% smaller and much noisier (p<0.10)). Still, this suggests that white arrestees are not immune from these police incentives 15/17

Limitations:1) our data and ID strategy are coarse. 2) we’re only able to make causal inferences at the margin. 3) We use deficits to *identify* the problem, but the problem of revenue driven law enforcement probably exists wherever police can retain revenues 16/17

Our results raise questions about the wisdom of non-revenue neutral law enforcement. It’s hard to imagine “optimal deterrence” or “justice”, when each potential arrestee is measured not just by the weight of their transgression, but by how much $ can be extracted from them 17/17

[Mike Editorializing 1] There are *so many* issues at the intersection of race and law enforcement, but how often do we come across one for which there is a direct and immediately accessible policy fix? 1/2

[Mike Editorializing 2] In a perfect world, law enforcement would be revenue-neutral, but in this case there is a 2nd-best solution on the sidewalk: F&F $$ should never be retained by the police. Put it in general/state budget. Fungible, sure, but the flypaper effect is real 2/2