Police-Involved Fatalities and Municipal Fiscal Health

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George Floyd killing in Minneapolis spotlighted the role of police-involved fatalities that cause immeasurable harm to victims’ families and communities, weaken public trust in government, and may lead to civil unrest. Police-involved fatalities place a real financial burden on the cities, given the size of awards to victims’ families and the cost of implementing consent decrees. By quantifying the impact of fatal encounters on city credit rating, this study offers evidence for policymakers to make informed decisions regarding the policing practices in their cities, leading to more equitable policing. Credit ratings incorporate third-party perceptions of local governments’ fiscal, economic, demographic, and political performance (Johnson and Kriz 2002; Marlowe, 2007, Jimenez 2011; Moldogaziev and Guzman 2015). This manuscript examines the impact of fatal encounters on the creditworthiness of the 150 largest US cities from 2000 to 2017. We observe a consistent negative correlation between police-involved fatalities and credit ratings among all the model estimates. These correlations remain statistically significant for about five years following the incidents. We also estimate that the larger the share of non-white victims of police violence, the lower the cities’ credit ratings are.

Original Citation

Guzman, Tatyana and Clark, Benjamin Y., Police-Involved Fatalities and Municipal Fiscal Health (October 4, 2022). Available at SSRN: https://ssrn.com/abstract=4238053 or http://dx.doi.org/10.2139/ssrn.4238053