By John K. Roman, Gregory Haugan, Benjamin Schapiro and Sofia Rodriguez

  What are the effects of drug-related arrests on New York City neighborhoods? Effects of criminal justice actions (including incarceration, arrest, misdemeanor conviction, and/or community supervision) extend beyond individuals and families to include the well-being of local communities. Collateral, unintended consequences of drug arrests include negative education and socioemotional outcomes for children whose parents have been incarcerated, shocks to local crime dynamics that impact levels of violence, and even effects on property values. Local economies and drug arrests affect each other in ways that are difficult to disentangle. Drug arrests tend to cluster in particular places and those clusters may persist over long time periods. Places where drug arrests cluster may be more amenable to drug trafficking and less amenable to legal economic activity, and illegal drug activity may lead places to become less viable economically. Interactions between the micro economy and drug trade are not easily understood. Statistical models built with administrative data may lead to biased estimates. One solution is to employ statistical techniques to separate the effects of system-level shocks associated with drug arrests (e.g., policy changes, supply shocks), from the effects of local factors that may be tied up with local property values or general levels of violence (e.g., migration or gentrification). Data from system shocks may provide an unbiased estimate of the effect of drug activity on the microeconomy. Using data from New York City's Open Data Portal and other administrative data sets, researchers from NORC at the University of Chicago measured the collateral consequences of arrests for drug law violations. The spatial patterns of drug arrests over time were examined to test for a disproportionate impact on communities of color and economically disadvantaged communities. Annual drug arrests in individual census tracts were predicted by examining drug arrests in the rest of the city that year and weighting them by the share of all homicides in the city that occurred in the census tract in the baseline (i.e., pre-analysis) period. This is a variation on an instrumental variables approach known as a Bartik Instrument and is referred to as a “Bartik Shock.” Results suggest that arrests for drug-law violations in a neighborhood reduce property tax assessments and the effect takes up to three years to manifest. The delay may be due to the time it takes for changes in drug arrests to affect perceptions of safety. On the other hand, drug arrests could have more immediate effects on perceptions of safety but delays in the administrative process of assessing property values could account for a lag in values. Researchers also tested whether the effects of drug arrests vary according to a community’s socioeconomic status and racial composition. The results suggest that negative effects of drug arrests in the third year after the tax assessment are greatest in areas in the bottom quartile for median income. Effects of arrests on property values were also greater in communities of color, particularly driven by census tracts in the upper quartile for their share of the city's Hispanic population. The general goal of the analysis was to determine whether more drug arrests in a neighborhood are associated with changes in a community's economic well-being. The results indicate that, on average, a one percent increase in drug arrests is associated with a two percent decline in assessed property values, and the effect is lagged: drug arrests this year tend to affect property tax assessments three years from now.    

New York, NY: Research and Evaluation Center, John Jay College of Criminal Justice, City University of New York. 2024. 29p.