The economic dimensions of interpersonal violence
Interpersonal violence is expensive. For instance, estimates of the cost of violence in the United States of America reach 3.3% of the gross domestic product. In England and Wales, the total costs from violence - including homicide, wounding and sexual assault - amount to an estimated $40.2 billion annually1.
Interpersonal violence is defined to include violence between family members and intimate partners and violence between acquaintances and strangers that is not intended to further the aims of any formally defined group or cause. Selfdirected violence, war, state-sponsored violence and other collective violence are specifically excluded from these definitions.
This report, based on an extensive review of peer reviewed articles and published and unpublished reports, treats the following themes:
- The economic effects of interpersonal violence in a variety of socioeconomic and cultural settings.
- The economic effects of interventions intended to reduce interpersonal violence.
- The effects of economic conditions and policies on interpersonal violence - with particular reference to poverty, structural adjustment, income equality and social investment.
Interpersonal violence disproportionately affects low- and middle-income countries. The economic effects are also likely to be more severe in poorer countries. However, as this report shows, there is a scarcity of studies of the economic effects of this violence in low- and middle-income countries. Comparisons with high-income countries are complicated by the fact that economic losses related to productivity tend to be undervalued in low-income countries since these losses are typically based on foregone wages and income. For example, a single homicide is calculated to cost, on average, $15 319 in South Africa, $602 000 in Australia, $829 000 in New Zealand, and more than $2 million in the USA.
Many of the studies detailing the costs of violence are from the USA where child abuse results in $94 billion in annual costs to the economy - 1.0% of the gross domestic product. Direct medical treatment costs per abused child have been calculated by different studies to range from $13 781 to $42 518. Intimate partner violence costs the USA economy $12.6 billion on an annual basis - 0.1% of the gross domestic product - compared to 1.6% of the gross domestic product in Nicaragua and 2.0% of the gross domestic product in Chile. Gun violence - which includes suicides - has alone been calculated at $155 billion annually in the USA, with lifetime medical treatment costs per victim ranging from $37 000 to $42 000.
Evidence abounds that the public sector - and thus society in general - bears much of the economic burden of interpersonal violence. Several studies in the USA showed that from 56% to 80% of the costs of care for gun and stabbing injuries are either directly paid by public financing or are not paid at all - in which case they are absorbed by the government and society in the form of uncompensated care financing and overall higher payment rates. In low- and middle-income countries, it is also probable that society absorbs much of the costs of violence through direct public expenditures and negative effects on investment and economic growth.
There are relatively few published economic evaluations of interventions targeting interpersonal violence. Available studies showed that preventive interventions to stop interpersonal violence occurring cost less than the money that they save, in some cases by several orders of magnitude. The 1994 Violence Against Women Act in the USA has resulted in an estimated net benefit of $16.4 billion, including $14.8 billion in averted victim's costs. A separate analysis showed that providing shelters for victims of domestic violence resulted in a benefit to cost ratio between 6.8 and 18.4. Similarly, the costs of a programme to prevent child abuse through counselling equalled 5.0% of the costs of child abuse itself. Implementation of a gun registration law in Canada cost $70 million, in comparison with a total annual cost of $5.6 billion for firearm-related injuries in that country. Interventions that targeted juvenile offenders - including aggression replacement training and foster care treatment - resulted in economic benefits that were more than 30 times greater than the corresponding costs.
The approaches taken to several key methodological issues differed substantially across the studies reviewed. Studies documenting the economic effects of interpersonal violence have used a broad range of categories of costs. Those estimating indirect costs - including the opportunity cost of time, lost productivity and reduced quality of life - provided higher cost estimates than studies that limited the costs of violence to direct costs alone. Other key methodological issues included the economic values assigned to human life, lost productive time and psychological distress. The rate at which future costs and benefits are discounted, in accounting terms, also varied across studies.
Given the wide range of methodological differences and extensive gaps in the existing literature on the economics of interpersonal violence, there is a clear need for systematic future research into the costs of violence. Such research should follow rigorous methodological guidelines, be inclusive of both direct and indirect cost categories, and - perhaps most importantly - be comparable across countries and settings.
The World report on violence and health (Krug et al., 2002) also showed that effective interventions are available - particularly in the areas of child abuse and neglect by caregivers, youth violence and gun-related violence. Given the overwhelming evidence of the high costs of interpersonal violence, detailed analysis of the economic feasibility of interventions is a clear research priority.
1Throughout this document, to enable comparisons and to adjust for inflation and varying exchange rates, monetary values have been converted to 2001 US dollars. This was done by converting other currency amounts to US dollars using the exchange rate at the mid-point of the year of the estimate, then converting the resulting US dollar estimate to 2001 US dollars using the official US consumer price index. The exchange rates used are those from international markets, and are not adjusted for purchasing power parity