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I don’t know how effective gravel, shingle and small pebble paths are at preventing crime, (I've never come across any research that prooves its effectiveness), but you will see this idea recommended on other crime prevention websites and by the police. I suppose the idea is that if somebody is walking along a path like this they are bound to make a noise. So, using loose stone in this way and perhaps placing it under windows might give you some advantage, because the thief might worry about being heard by you or the dog, especially at night.
Do I think that you should dig up the ground at the base of all your windows and lay down gravel? Do I think you should remove your hard standing at the front of the house (where you park your car) and replace it with gravel and do the same with your drive and pathways? No to both!
I say "no" because I don't believe the crime prevention advantages you would gain are sufficient enough to warrant this measure. Concentrate instead on making sure the external lighting is sufficient, your boundaries are effective and all the doors and windows have been locked in the correct manner.
However, if you already have loose stone around the base of your windows or along the driveway and you like it and it helps you feel safer then I would certainly not suggest you remove it.
There are downsides to gravel and loose stone, of course, and one of these is the fact that little children love playing with the small stones. I was forever sweeping the flipping things up when my kids were little and such was the constant effort that I decided to do away with them altogether. Small stones also get picked up in shoe treads and get walked into the house or the car.
If you are tempted to use loose stone then make sure it is very small, as larger stones in the wrong hands can be used to break house and car windows and crack roof tiles and so on. Also constrain the small stones within timber or concrete slips to stop them spreading around.
Updated August 2016