Which indicator of income distribution explains crime better? Evidence from China

Income distribution is perceived to affect crime (Becker 1968; Thurow 1971; Merlo 2003). Consequently, economists have been modeling crime employing inequality indicators as one of the explanatory variables, yielding mixed results. This paper argues that income polarization rather than inequality indicators should be used instead. Technically, in addition to income gaps that are measured by inequality indicators, the recently developed polarization index of Duclos, Esteban, and Ray (2004) also captures clustering, which implies social segregation and immobility, both potentially causing social tensions and conflicts. Thus, this polarization index is expected to be a better variable in explaining crime. To substantiate our arguments, provincial panel data from China are used to model the crime–income distribution relationship. Income polarization is found to be positively and significantly associated with crime. When both income polarization and inequality indicators are included in the models, the former remains a positive and significant determinant while the latter becomes insignificant.