Is the proliferation of police-like private security firms in Britain not a mark of societal breakdown, but instead something to be desired?
The prospect of hired goons protecting individuals and communities could easily be used to paint a picture of decay in Britain. It evokes images of a failed Central American state where law and order has completely broken down. There is of course some element of truth in this — but there is also a case that private security should be welcomed.
Take this story about families paying £1,500 for “private bobbies” to police their homes. For reasons I will come to, it is probably a financially sound decision — indeed, the prices being paid to contractors tell us something interesting about appetites for the financial costs of marginal deterrence of crime. It of course demonstrates private enterprise and the free market acting to fill the gaps that would traditionally be filled by a state monopoly.
It’s hard not to see the practical benefits of private security
To have private police rather than the real thing also has advantages. They might carry handcuffs, wear stab proof vests, and have vehicles that look at first glance like police cars. But they can’t decide to infringe on your free speech liberties without consequence. If they do, you can easily sue them as a business. As a community, you can also — unlike with actual cops — hire and fire to express your dissatisfaction.
It’s hard not to see the practical benefits of private security. For a large number of crimes in Britain, there is the feeling that the police have given up. For the year ending March 2024, the charge/summons rate for victim-based crimes (which include violence, sexual offences, theft, robbery, and criminal damage) was 5.5 percent. In incidences of theft, including burglaries, which result in a suspect being caught and charged, the success rate has declined from 10.8 percent ten years ago to just 6.4 percent. Only 11 percent of the violent and sexual offence cases in England and Wales were closed after a suspect was caught or charged in the year to June 2024.
It’s probably likely that these figures hide even worse performance, with the low chances of the police bringing a perpetrator to justice driving high levels of crimes not being reported, as the victims are unwilling to pay the cost of time-consuming and often humiliating police processes for little hope of closure.
This piece is not intended as a crass rejoinder to the enormous, endemic, tragic failures, wrongs, and shortcomings of the British police in towns across the country. The cultural and institutional police failings over the child grooming gangs, for example, are so damning that this article should not be taken as a cheap shot. It’s more of a broader look at the culture of how we are willing to protect ourselves, and what price we are willing to pay.
The price is the interesting thing, in this instance. It may seem odd to some to focus so much on the pounds and pence of crime, particularly to those who often squeal and wail about a fixation on GDP and productivity. But those things matter. Not just in an obvious way, but also because prosperity is a quantifiable proxy for the health and happiness of a nation. It’s quite hard for a number of obvious reasons to see the specific effects of crime in something as broad as GDP, but the trend of private police-like security forces does give us some interesting signals from a marginalist standpoint (at its most basic, from the point of view of a supply and demand schedule.)
As individuals, we too often ignore the behavioural impact of crime at a micro level
Some of the costs of crime are obvious and easily measured. Putting a price on the damage or loss of property, the cost of insurance, medical bills from violence and loss of income from missed work and the cost of administering courts and incarcerating criminals are all reasonably straightforward. The intangible opportunity costs of businesses reallocating capital and resources to repairing damage caused by vandalism are easy enough to conceptualise.
However, as individuals, we too often ignore the behavioural impact of crime at a micro level. The marginal gains made by summing of exams passed over the median grade, entry to a more prestigious university, unpaid internships worked, hours worked with gratification deferred to put down a deposit to rent a flat in a city with better opportunities — all made of the course of years and hundreds of individual decisions — can be brought to zero by even a mild, or a threat of violence. It really is a heartbreaking reality that so much can be undone by a person being fearful of continuing to walk to the railway station to commute to work.
So does private security give value for money? A society attempting to maximise social utility (the sum of the benefits of actions, behaviours, or products brought to society as a whole) will try to minimise the social cost imposed by criminal acts. A criminal acting out of rational self-interest will try to maximise his or her private utility (seek to get the highest satisfaction from their economic decisions). Because we can generally categorise what interests both society and its individual members in this way, the price can tell us a lot about individual attitudes. Society rejects incurring greater costs derived from controlling criminal acts than the acts’ harm imposes (both at an economic level and in terms of incursions upon the liberty of the law-abiding citizen). This obviously varies from country to country and from community to community. England has a far lower tolerance of the costs of preventing littering and graffiti than Singapore, for example. Similarly, an individual rejects incurring a greater cost from committing a criminal act than the potential private benefit of its realisation — is the crime worth the time?
Stated preferences seem to suggest that in the abstract people value crime prevention less than they ought to. A well-known study polled a nationally representative sample of 1,300 US residents, asking them whether they would be willing to pay a randomised sum to reduce the incidence of one in every ten of a given crime. As one would expect, willingness-to-pay generally increased with both income and the risk of victimisation, but the study implied a marginal willingness-to-pay to reduce crime of around USD31,000 per burglary, USD75,000 per serious assault, USD253,000 per armed robbery, USD275,000 per rape and sexual assault, and USD9.9 million per murder. Evidently, the hypothetical nature of the study is going to throw out some skewed numbers. And USD9.9 million for a 10 percent reduction in murder, you would be inclined to simply move house, for example.
For that reason, we see some pricing of desire to reduce crime reflected in house prices. Crime is a disamenity, so all things being equal, we should generally see people willing to pay more for a house in a low crime area. We do see this to some degree — in a study in Sweden, by moving a house one km further away from a crime hotspot, its value was indicated to increase by more than SEK 30,000 (about EUR 2,797). But it’s not quite so straightforward, since, to return to the crime being worth the time point, while moving to a more affluent area may diminish your exposure to violent crime, criminals are evidently going to be more attracted to these higher value neighbourhoods for thefts. If you’re going to run the risk of being arrested for burglary, you might as well get arrested for a Rolex rather than a Timex.
It’s not necessarily satisfying to conclude with a “probably”, but that is the case with private security, and it is “probably” worth it for most people (as well as those who freeride on the spillover effects of concerned individuals paying for the service). We should probably be willing to pay more for security, we should probably price the costs of crime at a higher level, but there is also the heartening point that these things don’t have to be forever and should we achieve a more peaceful society, it is a solution that can be temporary.
