The Economic Impact of Firearm-related Crime in Canada, 2008

5. Victim CostsFootnote 24

The most direct impact of crime is experienced by victims. Many costs are incurred as a direct result of firearm-related crime, such as health care costs, productivity losses and value of stolen/damaged property. To reflect the well-documented differences between male and female victims, costs presented in this section will be gender-disaggregated. Table 9 summarizes the total victim costs.

Table 9: Victim Costs for firearm-related crime, 2008
  Female Male Total
1. Health Care $1,563,942 $5,585,196 $7,149,138
1.1 Physician $12,185 $167 $12,352
1.2 Emergency department $872,771 $66,298 $939,069
1.3 Hospitalization $678,986 $5,518,731 $6,197,717
2. Productivity Losses $59,457,958 $95,069,415 $154,527,373
2.1 Lost Wages $42,801,495 $19,442,345 $62,243,840
2.2 Lost Household Services $15,346,703 $4,757,848 $20,104,551
2.3 Lost School Days $5,980 $220,675 $226,655
2.4 Lost Child Care $42,300 $0 $42,300
2.5 Lost future income $1,261,480 $70,648,547 $71,910,027
3. Personal Costs $51,374,051 $8,202,392 $59,576,443
3.1 Stolen/Damaged Property $26,157,986 $2,233,247 $28,391,233
3.2 Legal Services $19,490,625 $539,385 $20,030,010
3.3 Counselling Services $5,725,440 $5,429,760 $11,155,200
4. Intangible Costs $615,336,000 $1,881,015,000 $2,496,351,000
4.1 Pain and Suffering $428,086,000 $540,305,000 $968,391,000
4.2 Loss of life $187,250,000 $1,340,710,000 $1,527,960,000
Total $727,731,951 $1,989,872,003 $2,717,603,954

5.1 Health Care Costs

As discussed earlier, despite the benefits of self-reported victimization survey, they do have limitations. The GSS is a telephone survey. Recent social and technological developments are now making it, not only costly, but also more difficult to conduct telephone surveys (Tourangeau 2004). These include call blocking and answering machines that make it harder to reach people by telephone. In addition, the use of cell phones has increased dramatically over the previous years. Specifically, while the percentage of households with at least one cell phone has increased from 41.8% to 74.3% from 2002 to 2008, the percentage of households relying solely on cell phones has also increased from 5.1% to 8.0%.Footnote 25 In the 2009 GSS , persons with only cellular telephone service were excluded.

As a result, random-digit-dialling techniques, which traditionally use landline telephone numbers, are likely reaching less and less of the Canadian population and the samples become less representative than they were in the past. Although major differences between a sample and the population with regards to gender, age, income, education, and marital status can be partially addressed through the use of weighting techniques and quota sampling, non-representative coverage bias may still exist. Since the younger generation is more likely to carry cell phones only, the younger population is less likely to be reached by the traditional telephone survey. As discussed previously, youth and gang members are more likely to carry, use, and/or be victimized by a firearm, so this group might be underrepresented in the 2009 GSS. Furthermore, the GSS greatly relies upon respondents to recall and report events accurately and therefore, any inaccurate reporting would compromise the quality of the GSS.

For example, in the Incident File of the 2009 GSS, 24,854 male respondents and 24,299 female respondents indicated that they had been victimized by certain violence where a firearm was present or used. Although 5,789 male victims (23%) and 9,021 female victims (37%) reported that they were injured as a result of the incident, none of them reported that they had sought any type of medical attention. Therefore, there would be no health care costs for those firearm-related offences that were recorded by the Incident File of the 2009 GSS. This is not likely to be true as firearm can cause serious injury (Frappier et al., 2005) and it is the one of the leading cause of death in both Canada (Leonard, 1994) and the US (Fingerhut and Anderson, 2008). As discussed in the literature review section, the health care costs associated with firearm-related injuries are very significant.

The 2009 GSS findings are also significantly different from those obtained from the previous cycle of the GSS (2004). The 2004 GSS Incident File reported that there were 32,566 male victims and 10,518 female victims of crime where a firearm was present or used. While 5,914 male victims and 1,270 female victims visited hospital for medical attention (non-overnight), 2,019 male victims and 1,270 female victims were hospitalized. Similar data issues have also been identified for the Main File of the 2009 GSS.

On the other side, both police-reported data (UCR2) and hospital-based data (DAD) suggest that a great number of victims of firearm-related crime required medical attention, either a doctor visit or hospitalization. Therefore, it is reasonable to suspect that the 2009 GSS might not be fully representative due to the above discussed coverage limitations. It is important to bear these data issues in mind when reviewing the research findings.

Medical Attention from Physicians

According to the 2009 GSS, 219 female victims and 3 male victims received medical attention from a physician as a result of the firearm-related incidents. The average cost of one physician visit was about $55.64 in 2008. Therefore, the costs of receiving medical attention from physicians as a result of firearm-related crime were $12,185 for female victims and $167 for male victims.

Medical Attention at Emergency Departments

The GSS reported that 1,017 female victims and 82 male victims (of crime where a firearm was present or used) had received medical treatment at emergency departments (ED). It is estimated that the average cost per ED visit was $400.41. In addition, according to the information provided by the CIHI, 78% female victims and 70% male victims were transported to emergency departments by ground ambulance services. In 2008, ground ambulance service cost about $587.08 per transport. Following this, the total costs of receiving medical attention at emergency departments were $872,771 for female victims and $66,298 for male victims. It is important to distinguish these figures from the estimates presented in the following paragraph by noting that the ED costs examined here (based on the GSS data) cover all injuries as a result of victimization which might not necessarily be caused by firearm. In contrast, the paragraph below discusses the ED visit costs for injuries that were specifically caused by a firearm during the violence.

Hospital-reported data which were extracted from the National Ambulatory Care Reporting System (NACRS) were used. As information with regard to the ED visits is only available in Ontario, we assume that the per-capital count in Ontario is the same as the per-capital count in Canada. In this way, it is estimated that in 2008 there were 23 female victims and 341 male victims who were treated at emergency departments in Canada for firearm-caused injuries. Among these victims, 78% women and 70% men were transported to emergency departments by ground ambulance services. Applying the average treatment cost per ED visit ($400.41) and the average cost per ground ambulance transport ($587.08), the total costs of receiving medical attention at emergency departments for firearm-caused injuries are, therefore, estimated at $19,776 for female victims and $275,678 for male victims.

Hospitalization

According to the GSS, only 268 female victims (no male) reported that they had stayed at hospital for more than one night. Given the limitations discussed above, this information might not be representative. Therefore, we use hospital-reported data to calculate the associated acute hospitalization costs. However, as the hospital-based data provided by the CIHI only covers injuries that were specifically caused by firearms, this impact might be underestimated as other types of injuries (non-firearm) could also have occurred as a result of the firearm-related violence.

To estimate the hospitalization costs, data extracted from the Discharge Abstract Database (DAD) are used. As Quebec is not included in this database, data are adjusted for the coverage limitation. It is estimated that 14 female victims and 269 male victims were admitted to hospital for firearm-caused injuries. In addition to patient counts, the DAD also provides valuable cost information, for each firearm/gunshot category, such as average length of stay, average resource intensity weight and cost per weighted case, which enables us to estimate the average hospitalization cost for firearm-caused injuries by gender: $46,868 per female victim and $19,997 per male victim. Therefore, the total hospital treatment costs were $656,152 for female victims and $5,379,193 for male victims.

Furthermore, the DAD data also suggest that about 15 female and 170 male patients were transported to hospital by certain types of ambulance services, including ground ambulance, air ambulance or a combination of air, ground and water ambulance. As the average cost for providing a ground ambulance transport and an air ambulance transport was $587.08 and $4,675.84, respectively, the total ambulance transportation costs were $22,834 for female victims and $139,538 for male victims.

Combining the two costs together, the total acute hospitalization costs for firearm-caused injuries were $678,986 for female victims and $5,518,731 for male victims.

Therefore, the total health care costs were $7,149,138 of which $1,563,942 was for female victims and $5,585,196 was for male victims. See Appendix B.1 for detailed calculations and sources.

5.2 Productivity Losses

When a victim is unable to go to work or school, or perform household duties, there is a loss to the victims and also to society as a whole. Reasons for such losses include not only serious injuries that require hospitalization or bed rest, but also the time dealing with the criminal justice system for trial or compensation. These costs are calculated in this section and are briefly described below.

Lost Wages and Salaries

In estimating lost wages and salaries, we calculate the total number of days that victims were hospitalized, stayed in bed (for most of a day) and took time off from daily activities. Respondents of the GSS who reported that their main activity was “working at a paid job or business” or “maternity/paternity leave” are included. It is estimated that the total lost working days were 295,543 for female victims and 138,337 for male victims. According to the GSS data, the average daily wage rate for these victims was within the range of $118 and $179. Following this, the total lost wages were $42,801,495 for female victims and $19,442,345 for male victims.

Lost Household Services

Services performed in the house have a value to the individual and to the rest of the family. When someone is unable to perform some or all of their normal household chores such as cleaning, cooking, lawn care and taking care of their family members, these services need to be replaced either by another family member or by hiring outside household workers. In the former case, there would be an opportunity cost and in the latter case, there would be a hiring cost. In some cases, those injured victims might still be able to perform the services, but at a slower pace. The additional time is also a loss since that time could have been spent on more productive or leisure activities.

The GSS reports that there were a total of 298,110 lost days for female victims and 144,177 lost days for male victims during which the victims were either hospitalized or staying in bed, or having to take time off from daily activities. According to the 2010 GSS on the time use of Canadians, women and men spend, on average, 3.9 hours and 2.5 hours, respectively, per day on household work and related activities, including cooking/washing up, housekeeping, maintenance and repair, child care, shopping for goods and services. We use the average hourly wage rate of $13.2 household workers as a proxy for the value of lost household services per hour. Combining all of the information together, it is estimated that the value of lost household services in 2008 was $15,346,703 for female victims and $4,757,848 for male victims.

Lost School Days

Students who missed many days in school might have to hire a private teacher or tutor to catch up. Someone who missed only one or two days might be able to make up the class time by working a few extra hours after school. The opportunity cost of the additional time learning might still be considered a loss. A high school or college student might otherwise work and earn money. Younger students might also give up the time doing household chores or just relaxing. In some serious cases, if too many school days were lost, an entire academic year might need to be repeated or there could be a permanent reduction in future earning capacity. However, that is only likely to be the very severe case and is not considered in the present study due to data limitations.

This cost is calculated for the victims whose main activity was “going to school”. Examining the age distribution of these victims indicates that all female victims aged 20 and above and the majority of male victims aged between 15 and 17. We assume that victims over the age of 18 were attending university or college, whereas victims under the age of 18 were receiving secondary education. The GSS suggests that female victims missed 154 university days and male victims missed 1,461 university days. In addition, another 4,328 secondary school days were missed for male victims. According to Statistics Canada and provincial department of education, the daily school cost is estimated at $38.83 and $37.88 for university education and secondary school education, respectively. Following this, the value of lost school days was $5,980 for female victims and $220,675 for male victims.

Lost Child Care Services

Similar to the logic in estimating the value of lost household services, when someone is unable to take care of the children, the services have to be replaced by outside child care service providers or by another family member. There would be a fee or an opportunity cost. The victims whose main activity was “caring for children” were included in this estimation.

According to the GSS , there were a total of 1,410 days for which some female victims could not perform the child care services. No male victims of firearm-related crime stated that their main activity was “caring for children”. The national average daily cost of child care was $30 in 2008. Therefore, the value of lost child care services was $42,300 in 2008, all of which was ascribed to female victims.

Lost Future Incomes

For those victims who require life-time health care, all of their future earnings and workplace productivity will be lost. According to the CIHI data, 1 female victim and 62 male victims required life-time health care as a result of firearm-caused injury. The GSS data found that the average income of all victims of firearm-related crime, including those who had no income, was $33,550 for women and $34,219 for men. Taking into consideration the salary scale, remaining years of employment (if they had not experienced the incidents) and discount rate, it is estimated that the present value of lost future income is $1,216,480 per female victim and $1,139,493 per male victim. Therefore, the total present value of lost future income for female and male victims was $1,216,480 and $70,648,547, respectively.

All considered, the cost of lost productivity was estimated to be $154, 527, 373 of which $59,457,958 was attributable to female victims and $95,069,415 to male victims. See Appendix B.2 for detailed calculations and sources.

5.3 Personal Costs

Stolen and Damaged Property

The GSS also collected information on the value of stolen and damaged property, which includes stolen cash or property, damaged personal property, damaged motor vehicle, dwelling or other building on property and household property. Note that only the Incident File of the 2009 GSS provides such information. Therefore, the loss of stolen and damaged property resulting from spousal violence with a firearm is not captured.

About 23,861 female victims and 9,916 male reported that they had property stolen or damaged during the incidents. The data suggests that the average value of property belongings to female victims is almost five times higher than that of male victims. It is estimated that the total value of the stolen and damaged property as a result of the incidents were $26,157,986 for female victims and $2,233,247 for male victims.

Legal Services

The GSS data found that 16,875 female victims and 467 male victims had contacted a lawyer to talk about the incidents. Note that the legal aid expenditures for criminal court cases (715 cases) have been examined in the criminal justice system section, and the legal services discussed in this section mainly refer to personally hired counsel (by victims) for various other issues, such as understanding court process and perusing civil damages. According to the Canadian Lawyer's 2009 legal fees survey, the national average hourly rate for a lawyer was about $231 in 2008. As no available information suggests the average length of use of legal services, it is assumed that on average each victim used 5 hours of services. Following this, the legal services cost $19,490,625 for female victims and $539,385 for male victims.

Counselling Services

Although not all crime victims would experience severe psychological trauma, many victims would develop at least mild stress responses, such as depression, phobias or anxiety, following their victimization. While these negative responses can affect their daily lives, counselling services can assist victims to better manage the situation and to resume their lives. According to the GSS , about 3,408 female victims and 3,232 male victims reported that they had contacted a counsellor or psychologist for help. While the information regarding the average national counselling fee is very limited, we find several figures in some provinces. For example, in Saskatoon the average cost of private, unsubsidized counselling was $60 to $100 per hour in 2002 and community-based, publicly funded counselling was typically $45 per hour. This rate was also within the rate range ($40-$105) given by the Crime Victim Assistance Program Counselling Guidelines, regulated by the Ministry of Public Safety and Solicitor General, British Columbia. It is decided to use a lower bound value of the private, unsubsidized counselling for the estimation. After adjustment for inflation, the counselling cost is estimated at $70 per hour in 2008. We also assume that victims on average required 24 hours of counselling services, which is half the amount of the maximum number of hours for counselling services provided by several victim assistance programs. Therefore, the counselling service expenses for female and male victims were $5,725,440 and $5,429,760, respectively.

Total personal costs for female victims were $51,374,051 and for male victims was $8,202,392. This produced a grand total of $59,576, 443. See Appendix B.3 for detailed calculations and sources of the estimates presented in this section.

5.4 Intangible Costs

As discussed in the Methodology section, the intangible victim costs of pain, suffering and loss of life are the most difficult component to measure and subject to considerable uncertainty and controversy. Yet, when measured, they are inevitably the largest component of victim costs.

Pain and Suffering

Pain and suffering refer to “non-pecuniary damages” for the physical and emotional stress caused from being victimized. In Canada, many provinces have victim compensation programs to assist victims and their families for items such as counselling, damaged and stolen property, and pain and suffering, etc. Unfortunately, there is no specific answer for calculating the true value of pain and suffering. Each case is unique. What a judge does when determining compensation for pain and suffering is evaluate how the personal injury has affected the victim's ability to function in everyday life and how the injury has effected the person's enjoyment of life. The Supreme Court of Canada has placed a limit on the amount of compensation that accident victims are entitled to receive for non-pecuniary damages for pain and suffering. To date, the maximum compensation for pain and suffering is slightly more than $300,000, but it is only paid to the most catastrophically injured victims.

Although courts normally only award pain and suffering compensation for victims with injuries, in this study, we estimate such value for every victim. This is because even for those victims without physical injuries, there could be a mental pain and anguish endured by the victims due to the victimization. Previous studies (Turner, Finkelhor and Ormrod) have shown that violence exposure could make a significant contribution to levels of both depression and anger/aggression. Furthermore, there could also be a loss of life enjoyment as a result of the crime. Cohen (1988) used jury award information to value pain and suffering for non-fatal injuries. He estimated the monetary value of pain and suffering for gunshot wound/firearms injury at USD$59,344, which is equivalent to $117,000 in 2008 Canadian dollars. We use this value for the victims with major physical injuries that were caused by firearms.Footnote 26 In addition, Cohen (1988) also estimated the value of pain and suffering for victims of various other crimes, including USD$43,561 for rape, USD$7,459 for robbery and USD$4,921 for assault. After adjustment for inflation and exchange rate effect, these values are equivalent to $84,500, $14,500 and $9,500 in 2008 Canadian dollars. These values will be used for victims with minor or no physical injuries, by crime type.

According to the GSS, there were a total of 28,473 female victims and 25,583 male victims, among which 347 female and 1,653 male victims were with major firearm-caused physical injuries. For the remaining victims, 1,038 women and 1,423 men were victims of sexual assault, 8,488 women and 2,565 men were victims of robbery and 18,600 and 19,944 were victims of assault. By combining all the information, it is estimated that the total value of pain and suffering for female and male victims was around $428 million and $540 million, respectively.

Loss of Life

There is now an extensive literature on the estimation for the value of statistical life (VSL), which has become the standard for assessing the benefits of risk and environmental regulations (Viscusi, 2008). The economic approach on value of life is not simply equating the value of an individual life with the present value of his/her future income. Rather, VSL is the rate of trade-off between money and very small risks of death.

Note that VSL is not a constant as individuals' risk-money tradeoffs vary across the population and also vary over time since their age and economic circumstances changes. The heterogeneity of VSL has become a more prominent issue and many studies (Johansson, 2002; Aldy and Viscusi, 2008; Viscusi and Aldy, 2007; Viscusi, 2009) have developed estimates of the heterogeneity of VSL on dimensions such as individual age, income, immigrant status, and the nature of the risk exposure. For example, Kniesner, Viscusi and Ziliak (2006) find an inverted-U-shaped relationship between the VSL and age. In addition, due to the positive income elasticity (life or health is a normal good), the VSL rises when personal income increases. Despite the heterogeneity of the VSL, using uniform VSL estimates to monetize the benefits of risk regulations and other policies has become standard practice in the US and in many other countries (Viscusi, 2010). Kniesner, Viscusi and Ziliak (2006) find that proper application of evidence on the trajectory of VSL over the life cycle would have little effect on the estimates that would be obtained without any age adjustment.

While there is no agreed-upon method or explicit standard used to select the appropriate value, the fact that the VSL usually rises/adjust over time due both to the positive income elasticity of VSL and inflation have been readily accepted in both academic and policy context. The Department of Transportation of the United States used VSL of $1 million or less in earlier 1980s, but has now raised the VSL to USD$5.8 million in 2007 based on a review of several Meta analyses of the VSL literature.Footnote 27 Moreover, the agency recognizes that there is a positive income elasticity of the VSL, and adopted the mean income elasticity of 0.55 from Viscusi and Aldy (2003) as the department's official income elasticity value. The U.S. Senate bill S.3564 proposed in 2008 also recognized the role of income adjustments, stating that the VSL amount must be increased annuallyto reflect “the average annual total compensation of individuals, including income and benefits.”Footnote 28

The Canadian Costs Benefit Analysis Guide: Regulatory Proposals published by the Treasury Board of Canada suggests a value of $6.11 million for the year of 2004 (which was adjusted for inflation from a value of $5.2 million in 1996) and expect departments to use this value after adjusting it for inflation.Footnote 29 As discussed above, adjusting a previous VSL for inflation only is not sufficient and might not be as appropriate as applying a figure based on more recent studies. The 2008/2009 VSL figure (average estimate based on labour market) in the US was about USD$7-8 million. Following this, it is decided to use this more recent figure in the report (USD$ 7 million) which is equivalent to $7.49 million in the 2008 Canadian dollar.

The police-reported data report that there were a total of 204 victims killed as a result of firearm-related violence in 2008. Among the total, 199 were victims of homicide and 5 were victims of other violations causing death. Men continued to be the majority as compared to women (179 versus 25). Therefore, the total value for the loss of human life in 2008 was $187 million for female victims and $1,341 million for male victims.

Total intangible costs were therefore estimated at $2,717,603,954 of which $727,731,951 was ascribed to female victims and $1,989,872,003 was ascribed to male victims. See Appendix B.4 for detailed calculations and sources.