Most of you reading this understand instinctively that “bank robber” is a poor career choice, somewhere below that of politician or spammer. Now, a new study of exclusive data from the British Bankers’ Association finds that bank robbery is not really a great economic choice, either. In the scheme of things, it really doesn’t pay all that much.
The study, conducted by Barry Reilly, Neil Rickman and Robert Witt, economics professors at the University of Surrey, finds that the haul from the average bank robbery is relatively small, compared to that of more legitimate pursuits. The report was published in Significance, the magazine of the Royal Statistical Society and the American Statistical Association. While the topic may seem flip, it actually is intended to help financial institutions better understand the costs versus benefits of deterrents.
Banks in the UK suffer about 106 robberies a year, while the rate is 12,000 within the US.
The paper’s authors developed an economic model of the bank heist, balancing a robber’s efforts against his (or her) gains or losses, concluding that it is often a poorly paid career path. While the (unconditional) average proceeds from a bank robbery in 2005-08 in the UK were £20,331 ($31,668), this compares with reports from the US of figures in the region of $4,300. About one-third of robberies yield nothing at all.
Further, if a robber carries out multiple raids to boost his or her income, probability says that after four raids he or she may be incarcerated for some time — thus greatly diminishing his or her earning power.
The paper estimates the average takings per person per successful raid are a seemingly modest £12,706.60 (approximately $19,792), equivalent to less than six months’ average wage in the UK.
“Although bank robberies will take place for a number of ‘impulse-related’ reasons, our evidence suggests that the takings they generate appear to be consistent with economic theory,” said Professor Rickman.
It would be interesting to see a study of the economic gains — or, preferably, lack thereof — derived from online scams, hacking or phishing as well. Perhaps such data could help steer would-be cyber-criminals into more productive, and legal, pursuits.
The bank robbery estimates are based on a number of variables, including the number of robbers involved in the raid (labor input), and whether firearms were displayed (capital input). The presence of firearms increased the rewards across all bank raids to an average return per person of £10,300.50 (about $16,044). There was a clear connection between the number of raiders and total takings - the bigger the gang, the greater the success, with every extra gang member raising the take on average by £9,033.20 ($14,070). Even so, with extra gang members to share the proceeds, the haul per person decreases.
Deterrent factors working against the raiders, including bank security measures, activated alarms, and the number of bank staff and customers present, also were examined for their effectiveness. Of these deterrents fast-rising security screens, which are present in only 12% of UK banks, and in even fewer banks in the US (where armed guards are a more common deterrent) were most significant, reducing the probability of a successful raid by one-third.
The authors acknowledge that bank robberies involve other costs (such as social and psychological ones to customers and staff) and that using deterrents may increase the social gain available from such measures.