In a follow-up to the Levitt "crime" papers, it now seems that it is falling lead levels that are responsible for the dramatic drop in US crime rates.
This result suggests that your average political economy theorist is in a bit of a bind.
See below the abstract for an interesting Washington Post article on this topic.
"Environmental Policy as Social Policy? The Impact of Childhood Lead Exposure on Crime"
NBER Working Paper No. W13097
Contact: JESSICA WOLPAW REYES
Amherst College - Department of Economics, National
Bureau of Economic Research (NBER)
Full Text: http://ssrn.com/abstract=986947
ABSTRACT: Childhood lead exposure can lead to psychological deficits that are strongly associated with aggressive and criminal behavior. In the late 1970s in the United States, lead was removed from gasoline under the Clean Air Act. Using the sharp state-specific reductions in lead exposure resulting from this removal, this article finds that the reduction in childhood lead exposure in the late 1970s and early 1980s is responsible for significant declines in violent crime in the 1990s, and may cause further declines into the future. The elasticity of violent crime with respect to lead is estimated to be approximately 0.8.
The theory offered by the economist, Rick Nevin, is that lead poisoning accounts for much of the variation in violent crime in the United States. It offers a unifying new neurochemical theory for fluctuations in the crime rate, and it is based on studies linking children's exposure to lead with violent behavior later in their lives. What makes Nevin's work persuasive is that he has shown an identical, decades-long association between lead poisoning and crime rates in nine countries.
"It is stunning how strong the association is," Nevin said in an interview. "Sixty-five to ninety percent or more of the substantial variation in violent crime in all these countries was explained by lead."
Through much of the 20th century, lead in U.S. paint and gasoline fumes poisoned toddlers as they put contaminated hands in their mouths. The consequences on crime, Nevin found, occurred when poisoning victims became adolescents. Nevin does not say that lead is the only factor behind crime, but he says it is the biggest factor.
Giuliani's presidential campaign declined to address Nevin's contention that the mayor merely was at the right place at the right time. But William Bratton, who served as Giuliani's police commissioner and who initiated many of the policing techniques credited with reducing the crime rate, dismissed Nevin's theory as absurd. Bratton and Giuliani instituted harsh measures against quality-of-life offenses, based on the "broken windows" theory of addressing minor offenses to head off more serious crimes.
Many other theories have emerged to try to explain the crime decline. In the 2005 book "Freakonomics," Steven D. Levitt and Stephen J. Dubner said the legalization of abortion in 1973 had eliminated "unwanted babies" who would have become violent criminals. Other experts credited lengthy prison terms for violent offenders, or demographic changes, socioeconomic factors, and the fall of drug epidemics. New theories have emerged as crime rates have inched up in recent years.
Most of the theories have been long on intuition and short on evidence. Nevin says his data not only explain the decline in crime in the 1990s, but the rise in crime in the 1980s and other fluctuations going back a century. His data from multiple countries, which have different abortion rates, police strategies, demographics and economic conditions, indicate that lead is the only explanation that can account for international trends.
Because the countries phased out lead at different points, they provide a rigorous test: In each instance, the violent crime rate tracks lead poisoning levels two decades earlier.
"It is startling how much mileage has been given to the theory that abortion in the early 1970s was responsible for the decline in crime" in the 1990s, Nevin said. "But they legalized abortion in Britain, and the violent crime in Britain soared in the 1990s. The difference is our gasoline lead levels peaked in the early '70s and started falling in the late '70s, and fell very sharply through the early 1980s and was virtually eliminated by 1986 or '87.