Addiction GDP
Addiction GDP
Ari Etin
2025-08-26
Bakcground
In chapter 2, Szalavitz writes “the murder rate went from 6.5 per 100,000 in 1918 before Prohibition to 9.7
per 100,000 in 1933, the year of repeal, nearly a 50% rise. Suggesting that the relationship was likely to be
causal, this rate then fell back down under 6 per 100,000 by 1942.” A causal claim from three data points
seems like a stretch, so I decided to explore this some more.
Data from:
• Homicides: fraser.stlouisfed.org, page 414 (columns 972 and 980)
• Historical Real GDP Per Capita : Maddison Project Database 2023
1
vars n mean sd median trimmed mad min max range skew kurtosis se
Year 1 50 1925.5 14.6 1925.5 1925.5 18.5 1901.0 1950.0 0.049.0 -1.3 2.1
Homicides 2 50 6.3 2.2 6.3 6.5 2.1 1.1 9.7 -8.6 0.1 0.3
0.8
Suicides 3 50 13.3 2.0 13.1 13.3 2.4 10.0 17.4 7.4 0.2 -1.2 0.3
Prohibition 4 50 NaN NA NA NaN NA Inf -Inf -Inf NA NA NA
GDP 5 50 11070.2 2292.6 10336.1 10785.7 1695.3 8048.2 16999.3 8951.1 1.1 0.1 324.2
GDPGrowth 6 50 1.5 6.8 1.2 1.9 7.5 -15.6 12.9 28.5 - -0.6 1.0
0.4
2
Visually Explore Data
16000
8
Homicide Rate
Real GDPPC
14000
6
12000
4
10000
2
8000
Year
Blue dots for years during prohibition, green lines for years listed
We see that the prohibition years do indeed seem to have higher homicide rates, but they may align with an
overall trend of increased homicides starting from around 1910 and ending around 1934. There may also be
some correlation with GDP. Both of these ideas will be evaluated. It is interesting that Szalavitz chooses
dates close to, but not quite, the start and end of prohibition. These dates happen to correspond with local
minima.
3
Homicide and Real GDPPC Growth by year
10
10
8
5
Homicide Rate
Real GDPPC
6
−5
4
−10
2
−15
Year
Blue dots for years during prohibition, green lines for years listed
The GDP Growth data seems like a mess. For completeness, its value will also be evaluated.
Hypotheses
I propose six hypotheses. The first three regard the entire range of data (1901-1950) and the second regard
just the date range highlighted earlier (1910-1934).
1. H0 : When accounting for fixed effects, Prohibition does not predict homicide rates.
2. H0 : When accounting for fixed effects, Real GDP per Capita does not predict homicide rates.
3. H0 : When accounting for fixed effects, Real GDP per Capita Growth Rates do not predict homicide
rates.
4. H0 : When accounting for fixed effects, and in the date range 1910-1934, Prohibition does not predict
homicide rates.
5. H0 : When accounting for fixed effects, and in the date range 1910-1934, Real GDP per Capita does not
predict homicide rates.
6. H0 : When accounting for fixed effects, and in the date range 1910-1934, Real GDP per Capita Growth
Rates do not predict homicide rates.
Build Regressions
All data (1901-1950)
Since there appears to be an overall upwards trend (regardless of prohibition or GDP) since 1910, I decide to
implement a fixed effects model.
4
##
## Call:
## glm(formula = Homicides ~ Year, data = data)
##
## Coefficients:
## Estimate Std. Error t value Pr(>|t|)
## (Intercept) -133.13018 36.57305 -3.640 0.000666 ***
## Year 0.07239 0.01899 3.811 0.000393 ***
## ---
## Signif. codes: 0 '***' 0.001 '**' 0.01 '*' 0.05 '.' 0.1 ' ' 1
##
## (Dispersion parameter for gaussian family taken to be 3.75635)
##
## Null deviance: 234.88 on 49 degrees of freedom
## Residual deviance: 180.30 on 48 degrees of freedom
## AIC: 212.03
##
## Number of Fisher Scoring iterations: 2
234
4.5 5.5 6.5 7.5 0.0 0.5 1.0 1.5 2.0 2.5
Cook's distance
−2
0.0
3 2 1
5
## (Intercept) -2.963e+02 4.488e+01 -6.603 3.28e-08 ***
## Year 1.614e-01 2.396e-02 6.737 2.05e-08 ***
## GDP -7.465e-04 1.524e-04 -4.899 1.18e-05 ***
## ---
## Signif. codes: 0 '***' 0.001 '**' 0.01 '*' 0.05 '.' 0.1 ' ' 1
##
## (Dispersion parameter for gaussian family taken to be 2.539532)
##
## Null deviance: 234.88 on 49 degrees of freedom
## Residual deviance: 119.36 on 47 degrees of freedom
## AIC: 193.4
##
## Number of Fisher Scoring iterations: 2
1.5
−1
0.0
32 4
−4
32 4
1.0
0
−2
Cook's distance
0.0
4 32 0.5
6
##
## (Dispersion parameter for gaussian family taken to be 2.071197)
##
## Null deviance: 234.875 on 49 degrees of freedom
## Residual deviance: 97.346 on 47 degrees of freedom
## AIC: 183.21
##
## Number of Fisher Scoring iterations: 2
1.5
−2
0.0
34
0
−2
Cook's distance
0.0
3 2 1
7
## Residual deviance: 68.738 on 46 degrees of freedom
## AIC: 167.81
##
## Number of Fisher Scoring iterations: 2
1.5
0
0.0
−3
24
3
0
−2
Cook's distance
0.0
4 32
8
##
## Number of Fisher Scoring iterations: 2
1.5
0
0.0
−3
134
2
1.0
0
−2
Cook's distance
0.0
2
4 1
9
Std. Deviance resid.
Pearson Residuals
22
1.5
16
−0.5
0.0
10
2
16
1.0
−2 0
32
Cook's distance
0.0
10 0.5
10
Std. Deviance resid.
Pearson Residuals
22
1.5
29
−0.5
0.0
10
2
29 0.5
1.0
0
29 32
−2
0.5
Cook's distance
0.0
10 1
11
Std. Deviance resid.
Pearson Residuals
16 21
1.5
16
−0.5
0.0
10
2
16
1.0
0.5
0
20 1
−2
Cook's
10 distance
0.0
12
Std. Deviance resid.
Pearson Residuals
16 21
1.5
16
−0.5
0.0
10
2
16
0.5
1.0
0
32 1
−2
Cook's
10 distance
0.0
With both GDP and Prohibition included, neither is a significant predictor of homicide rate.
Add growth rate of GDP:
##
## Call:
## glm(formula = Homicides ~ Year + GDP + GDPGrowth + Prohibition,
## data = data[(data$Year <= 1934 & data$Year >= 1910), ])
##
## Coefficients:
## Estimate Std. Error t value Pr(>|t|)
## (Intercept) -3.208e+02 2.818e+01 -11.382 3.44e-10 ***
## Year 1.710e-01 1.455e-02 11.756 1.95e-10 ***
## GDP -5.730e-05 9.292e-05 -0.617 0.544
## GDPGrowth 1.184e-02 1.358e-02 0.872 0.394
## ProhibitionTRUE 3.017e-01 2.448e-01 1.233 0.232
## ---
## Signif. codes: 0 '***' 0.001 '**' 0.01 '*' 0.05 '.' 0.1 ' ' 1
##
## (Dispersion parameter for gaussian family taken to be 0.1242826)
##
## Null deviance: 46.3144 on 24 degrees of freedom
## Residual deviance: 2.4857 on 20 degrees of freedom
## AIC: 25.238
##
## Number of Fisher Scoring iterations: 2
13
Std. Deviance resid.
Pearson Residuals
21
1.5
20
−0.5
20
0.0
10
2
20
1.0
0.5
0
32 1
−2
Cook's
10 distance
0.0
With GDP, Prohibition, and GDP growth rate included, none are a significant predictor of homicide rate.
Model Comparison
All data (1901-1950)
First I explore R2 values using McFadden’s R-squared:
## [1] "Year: 0.232337915649511"
## [1] "Year and GDP: 0.491823803582177"
## [1] "Year and Prohibition: 0.585540447355061"
## [1] "Year, GDP, and Prohibition: 0.707342066647572"
## [1] "Year, GDP, Prohibition, and GDP Growth: 0.71087076434528"
Including GDP and Prohibition seem to both increase model performance. GDP Growth rate did not seem
to have much of an effect.
Then I conduct an anova analysis:
anova(year, gdp, full, fullgrowth)
14
## Resid. Df Resid. Dev Df Deviance F Pr(>F)
## 1 48 180.305
## 2 47 119.358 1 60.947 40.3863 9.263e-08 ***
## 3 46 68.738 1 50.620 33.5432 6.359e-07 ***
## 4 45 67.909 1 0.829 0.5492 0.4625
## ---
## Signif. codes: 0 '***' 0.001 '**' 0.01 '*' 0.05 '.' 0.1 ' ' 1
Adding GDP to the model reduced about a third of the residual deviation. Prohibition reduced residual
deviation by about one half. Both of these changes occurred regardless of the order of analysis. GDP Growth
had no significant effect.
Conclusions
Because the effect of including Prohibition in the model was significant, even when accounting for GDP,
we reject the null hypothesis, that Prohibition had no effect on homicide rates. We can also reject the null
hypothesis that GDP had no effect on homicide rates. We fail to reject the null hypothesis that GDP Growth
rates had no effect on homicide rates.
However, when examining the trend observed in the graphs of homicide rates — a steady increase from 1910
until 1934 — all predictors other than fixed effects lose significance. Thus, in this subset of years, we fail to
reject the null hypotheses that GDP, Prohibition, and GDP growth had no effect on homicide rates.
Further exploration may include lagging effects of GDP, effects of war, lagging effects of war (e.g. veterans
returning home with untreated psychological conditions), and other social shifts. Further expanding the
range of data may also provide valuable insights. Different types of homicides are not distinguished between
15
in these data. It is also possible that different operationalizations of GDP, homicides, etc. would result in
different outcomes.
Bibliography
Datasets
Bolt, J., & Van Zanden, J. L. (2024). Maddison Project Database 2023 (Version V1) [Dataset]. DataverseNL.
https://doi.org/10.34894/INZBF2
St. Louis Fed. (January 16, 2020). Suicide and homicide rate changes during Prohibition (1920-1933) in the
United States from 1900 to 1950 (rate per 100,000 people) [Graph]. In Statista. Retrieved August 26, 2025,
from https://www.statista.com/statistics/1088644/homicide-suicide-rate-during-prohibition/
R and R Packages
library(report)
16