Crime victimization, neighborhood safety and happiness in China

•Being a victim of crime or knowing a victim of crime negatively affects happiness.•To compensate a crime victim costs 60% of annual household income.•Living in a safe neighborhood has a positive effect on happiness.•The shadow price of an unsafe neighborhood is very high.

We examine the relationship between happiness, crime victimization and neighborhood safety in China. We find that being a victim of crime, and having an acquaintance who is a victim of crime, have a negative effect on happiness. The cost of compensating someone who is a victim of crime, such that they are returned to the same position as if they had not been victimized, is similar to the cost of compensating someone who has an acquaintance who is a victim of crime (around 60% of annual household income). Females who are victims of crime, and victims of out-of-home theft and assault/threat, feel less victimized if they have an acquaintance who is also a victim of crime with whom to share their experience. Living in a safe neighborhood has a positive effect on happiness. The amount needed to compensate someone for living in an unsafe, or neutral neighborhood, as opposed to safe neighborhood, is 1500% of annual household income, which is much higher than the shadow price suggested in studies for the United States and United Kingdom.