Working Knowledge
Business Research for Business Leaders
17 Apr 2014Working Paper Summaries

Poverty and Crime: Evidence from Rainfall and Trade Shocks in India

by Lakshmi Iyer and Petia Topalova
Concern about climate change has spurred a large body of scholarship examining how climate influences human behavior, particularly human conflict. While a link between climate and human conflict is well established, we still do not fully understand the mechanisms that underlie the observed relationship between rainfall and crime. In this paper the authors shed light on these mechanisms using four decades of district-level data from India. They first establish a robust effect of rainfall on different types of crime, with the strongest effects on violent crimes (including murder) and property crimes. They then go beyond previous studies, which simply document the link between weather variations and human conflict, and examine to what extent poverty is the main causal pathway between rainfall and crime. To do so they identify a source of income shocks for households in rural India that is completely independent of the amount of rainfall: trade reform that began in 1991. Findings show that violent crimes and property crimes, the types of criminal activities that are most sensitive to rainfall shocks, indeed respond to trade shocks. The larger the loss in trade protection a district experienced, the higher is the incidence of these crimes. Overall, the results provide evidence for income as a mechanism behind the observed rainfall-crime relationship, which had mostly been assumed in previous scholarship. Key concepts include:
  • Violent crimes and property crimes rise during periods of low rainfall and/or higher exposure to foreign competition.
  • Other crime categories such as crimes against women do not show a strong relationship with either periods of low rainfall and/or higher exposure to foreign competition.

Author Abstract

Does poverty lead to crime? We shed light on this question using two independent and exogenous shocks to household income in rural India: the dramatic reduction in import tariffs in the early 1990s and rainfall variations. We find that trade shocks, previously shown to raise relative poverty, also increased the incidence of violent crimes and property crimes. The relationship between trade shocks and crime is similar to the observed relationship between rainfall shocks and crime. Our results thus identify a causal effect of poverty on crime. They also lend credence to a large literature on the effects of weather shocks on crime and conflict, which has usually assumed that the income channel is the most relevant one.

Paper Information

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