Abstract
This paper uses the housing market to develop estimates of the local welfare of a large investment in police infrastructure in Colombia. Applying a research design based on the openings of police stations in the three largest cities, I study the effects of public safety investments on crime and housing markets. In particular, I quantify the relationship between a reduction in violent and non-violent offenses and changes in the prices of nearby residential properties. The results show that observable police reduce crime in overall; in particular, violent crime declines 20 percent and property crimes 40 percent. The effect is local, within less than half of a mile, with no appreciable impact outside the area where the police stations are built. If police stations are effective, then the hedonic model predicts that they will lead to increases in local housing prices and new home construction. Using information on housing prices with an unusually high degree of spatial detail, I find there is statistically significant evidence that the stations' openings affect housing values, they lead to a 6 percent increase.