Using Terror Alert Levels to Estimate the Effect of Police on Crime

We argue that changes in the terror alert level set by the Department of Homeland Security provide a shock to police presence in the Mall area of Washington, D.C. Using daily crime data during the period the terror alert system has been in place, we show that crime drops significantly, both statistically and economically, in the Mall area relative to the other areas of Washington, D.C. This provides strong evidence of the causal effect of police on crime and suggests a research strategy that can be used in other cities