What Happens to Stolen Bicycles?

It seems as if stealing bikes shouldn’t be a lucrative form of criminal activity. Used bikes aren’t particularly liquid or in demand compared to other things one could steal (phones, electronics, drugs). And yet, bikes continue to get stolen so they must be generating sufficient income for thieves. What happens to these stolen bikes and how to they get turned into criminal income?

The Depth of the Problem

In San Francisco, if you ever leave your bike unlocked, it will be stolen. If you use a cable lock to secure your bike, it will be stolen at some point. Unless you lock your bike with medieval-esque u-locks, your bike will be stolen from the streets of most American cities. Even if you take these strong precautions, your bike may still get stolen.

According the National Bike Registry and FBI, $350 million in bicycles are stolen in the United States each year. Beyond the financial cost of the crime, it’s heartbreaking to find out someone stole your bike; bikers love their bikes. (...)

An Economic Theory of Bike Crime

In 1968, Chicago economist Gary Becker introduced the notion that criminal behavior could be modeled using conventional economic theories. Criminals were just rational actors engaged in a careful cost-benefit analysis of whether to commit a crime. Is the potential revenue from the crime greater than the probability adjusted weight of getting caught? Or, as the antagonist in the movie The Girl Next Door puts it, “Is the juice worth the squeeze?”

Criminal activity (especially crime with a clear economic incentive like theft) could therefore be modeled like any financial decision on a risk reward curve. If you are going to take big criminal risk, you need to expect a large financial reward. Crimes that generate more reward than the probability weighted cost of getting caught create expected value for the criminal. Criminals try to find “free lunches” where they can generate revenue with little risk. The government should respond by increasing the penalty for that activity so that the market equilibrates and there is an “optimal” amount of crime.

Using this risk-return framework for crime, it begins to be clear why there is so much bike theft. For all practical purposes, stealing a bike is risk-free crime. It turns out there is a near zero chance you will be caught stealing a bike (see here) and if you are, the consequences are minimal.

There are a few great accounts of journalists getting their bikes stolen and then going on a zealous mission to try to capture bikes thieves (see here and here). In each account, they ultimately learn from local police that the penalty for stealing a bike is generally nothing.

“We make it easy for them. The DA doesn’t do tough prosecutions. All the thieves we’ve busted have got probation. They treat it like a petty crime.” 

“You can’t take six people off a murder to investigate a bike theft.”

Bike thievery is essentially a risk-free crime. If you were a criminal, that might just strike your fancy. If Goldman Sachs didn’t have more profitable market inefficencies to exploit, they might be out there arbitraging stolen bikes.

What Happens to the Stolen Bikes?

Just because the risk of a crime is zero, that doesn’t mean that a criminal will engage in that crime. If that were the case, thieves would go about stealing dandelions and day-old newspapers. There has to be customer demand and a liquid market for the product in order for the criminal to turn their contraband into revenue. So, how exactly does a criminal go about converting a stolen bicycle to cash?

We decided to survey the prior literature on where stolen bikes are sold as well as consult with bike shops and experts in San Francisco to get a better picture of who steals bikes and where the stolen bikes end up.

by Rohin Dahr, Priceonomics |  Read more: