A Case Study in Economics and Arson

A Case Study in Economics and Arson
Posted by Ross Keith

By Antonia Massa

Working as a firefighter in Bedford-Stuyvesant in 1999, Brooklyn fire marshal Joe Casaliggi began to notice that the types of people– and types of fires– in his neighborhood were changing.

“The demographics of the neighborhood changed, because it’s a quick ride on the train from Manhattan,” said Casaliggi. “People from Manhattan started coming in, and arson started going down.”

The shift isn’t complicated to explain. Arson is a crime intimately connected to economics. Because insurance generally covers fire damage, owners may have an incentive to set fire to their own properties to avoid losses in a recession and to fraudulently collect insurance money. Economists have even proven that arson rates are prone to fluctuate with the business cycle.

The close link between economics and arson has caused arson rates to plummet suddenly in New York City’s most rapidly gentrifying neighborhoods.

“Arson is a crime that’s done for different reasons– it could be done for insurance, it could be done because of arguments. But if you paid a million dollars for my house, you’re not burning it down for any reason,” said Casaliggi.

Bed-Stuy is one example of how falling arson rates can be a byproduct of gentrification. The neighborhood, which had the second highest arson rate of any New York City community district in 1993, has experienced a rapid drop-off in arsons in the past ten years. While 148 incendiary fires were reported in Bed-Stuy in 1993, there were 58 reported in the mayor’s management report in 2013– a precipitous drop by city standards. Meanwhile, home prices in Bed-Stuy have surged. Online real estate database Zillow lists Bed-Stuy’s market temperature (measured by sale-to-list price ratio, the prevalence of price cuts on home listings, and time-on-market) as hot, and measured a 25 percent increase in the neighborhood’s home values in the past year alone.

“When yuppies come in, they’re cleaning up the neighborhood,” said fire marshal Kevin Burns.

“They say, ‘I don’t want a fire at my place, and I don’t want a fire at your place either.’”

Alphabet City experienced the same dramatic shift in the 1990s. Once steeped in poverty and violence, the neighborhood’s crime rate dropped by 57 percent between 1993 and 2000. Arson rates didn’t drop off quite as quickly, but they did fall by 40 percent between 1993 and 2013.

“In Alphabet City there were a lot of squatters and people shooting up heroin. And if someone lights a fire in a building to stay warm, it’s considered an arson,” said Kevin Parrett, a private investigator for TJ Russo who spent ten years in the FDNY arsons and explosions department.  “You’re talking real extremes, where buildings are going from worthless to very expensive condos.”

Jim Bullock worked in Alphabet City starting in the mid-1970s and noticed that as land there began to become more valuable, arson petered out.

“In the eighties buildings were abandoned and vacant. People were doing it to get insurance,” said Bullock. “But that land became too valuable. The community didn’t allow it, in a way.”

Bullock, who’s now retired, said that this shift is indicative of a more widespread trend in New York City.

“The whole city has changed,” he said. “Land in New York City is very valuable now, and more protected.”

Use our interactive map to explore which city neighborhoods have had the largest changes in arson rates since 1993.

In 1993, Bedford Stuyvesant had the second highest arson rate in New York City.

In 2013, arsons have decreased by more than 60% in Bedford Stuyvesant, one of the highest rates of change 

Graphics by Ross Keith