Do Budget Cuts Cause More Riots?

Photo: william_79

The UK riots continue as PM David Cameron and the Metropolitan police flood London with 16,000 officers in hopes of calming the civil unrest.

Critics have suggested that this is the behavior of a generation that’s been ignored by the establishment. The anarchy on the streets of London has been attributed to high unemployment and disaffected youth, combined with a trigger event — the death of Mark Duggan, shot by police last Saturday.

A couple weeks ago, Jacopo Ponticelli and Hans-Joachim Voth put out their working paper “Austerity and Anarchy: Budget Cuts and Social Unrest in Europe, 1919-2009.” It uses cross-country data in the 90-year period to examine whether riots and civil unrest increase as governments cut spending. They found a positive correlation between social instability and budget cuts. With regard to the recent riots, Voth writes on his blog:

Once you cut expenditure by more than 2% of GDP, instability increases rapidly in all dimensions, and especially in terms of riots and demonstrations.

We also use some additional, more detailed data on the causes of each demonstration to confirm our hypothesis that the link is causal.

So, if you ever found yourself reading papers by Alesina and co-authors arguing that i. budget cuts can be good for growth ii. there is no punishment at the polls for governments cutting expenditure, and wondering why governments don’t engage in more austerity – maybe here is your answer. Even if (and it’s a big if, given the IMF’s latest research) Alesina et al. are right, and growth can follow cuts, the pain may be concentrated amongst some groups. If these become massively unhappy… it can start to look pretty ugly out there in the streets, and I doubt that that’ll be good for growth.

The Guardian’s Datablog has a map of all the spending cuts made to local councils in the UK last year. Thirty-six councils got the maximum cut of 8.9%, with a 4.4% average across the total 350 councils. Former London Mayor Ken Livingstone has already jumped on the “spending cuts = riots” explanation, to much criticism.

(HT: Jonathan Hersh)


Ricardo

While budget cuts and riots may be correlated, they are not necessarily causal. It is equally possible that cuts in police service have CAUSED apathy in enforcement thereby encouraging the riots.

ZB

Didn't read your post before posting my own.

But... yeah. So much for the scientific method, huh?

jocky scot

These riots are ENGLISH riots. The rest of the UK are not taking part.

ZB

Correlation does not equal causation. Scientists are supposed to know this.

I'm curious what, if any, socio/economic/political factors led to budget cuts?

horn

There haven't actually been any cuts yet, Livingstone, et al are bemoaning 'phantom cuts' or future cuts.
http://www.spectator.co.uk/coffeehouse/7122543/what-you-need-to-know-ahead-of-tomorrows-growth-figures.thtml
Average monthly government expenditure in the 12 months ending on June 30 2011 was £51bn compared to £48.5bn in the same period a year earlier, over 5% MORE spending.

According to the Chancellor of the Exchequer, England's net debt is scheduled to increase 51% going forward.

Decreases from a larger baseline predicted figure are not actual cuts.

anna moffatt

Great piece, freakonomics, you're bang on the money. Riots follow recession - the participants don't have to be consciously aware of this fact, it just happens naturally, like the herd mentality on the stock market. Which, more generally, reafirms the inteligence of crowds.

Moreover, its often overlooked that teenagers between the ages of 16-18 recieve no benefits from the state, so in times of high unemployment and cut backs to further education they are literally left with nothing. If this played a part in last weeks riots, the con/dems should think very carefully before stripping back benefits, that might play well with the readership of the Daily Mail but could make last weeks events in London, Birmingham and Manchester seem like a tame episode of Dale Winton's Supermarket Sweep.