Lecture Issues in economics today - Chapter 24

Chapter 24
The Economics of Crime

 

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Chapter Outline
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WHO COMMITS CRIME AND WHY
THE RATIONAL CRIMINAL MODEL
THE COSTS OF CRIME
OPTIMAL SPENDING ON CRIME
CONTROL

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Who Commits Crime and Why
• Disproportionately to their percentage in
the population crime is committed by
– Men
– The young
– The poor
– The socially disadvantaged

 

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Sources of Crime Statistics
• Police reports
– Potentially subject to police biases against
minorities.

• Victim accounts
– Not subject to bias because it is in the
interest of a victim to give an accurate
description of the perpetrator.

 

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The Result
• Whether we look at crime rates from
police reports or from victim accounts
the result is the same:
– minorities commit more crime than would
be accounted for by their 24% of the
population.

 

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The Rational Criminal Model
• Becker’s rational criminal model (RCM)
assumes that a criminal’s choice to commit a
crime is a rational one comparing the benefits
of the crime with the uncertain outcome of

success or jail.
• The model looks at crime like an investment:
take a risk, get a high expected return; play it
safe, get a low expected return.
 

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Implications of the RCM
• People with high legally-derived income
are less likely to commit crime.
• The greater the punishment the less
likely the criminal is to commit crime.
• The more likely the criminal is to be
caught the less likely they are to commit
crime.
 

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Evidence in favor of the RCM
• Less than half of the prison population
has a high school degree.
• 33% of criminals were not working
when they committed their crime.
• Crime rose during the 1980s as real
income for the poor was stagnant or
falling and fell during the 1990s when it
was rising.
 

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Evidence against the RCM
• Crime rose during the 1960s when real
income for the poor was rising.
• Crime was much lower during the
1930s when incomes were quite low
because of the depression.

 

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Challenges to the Basic
Assumptions of the RCM
• While property and drug crimes can be
seen through the expected “costbenefit” lens, others can not:
– e.g. rape, spousal abuse, assault, school
shootings.
– murder for hire is classic RCM but
generally murder is not for monetary gain.

 

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Costs of Crime
• $93 billion is currently spent on the
criminal justice system (police, courts
and prisons)
• There are nearly 14 million crimes
– 1.8 million violent
– 12 million non-violent
– Approximately 14 million more are

unreported
 

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How Much Does an Average
Crime Cost
• Types of costs
– Items taken or damaged
– Lost income of victims
– Psychological damage or “pain and suffering”

• Costs per crime estimates
– Ignoring Pain and Suffering ..$500
– Including Pain and Suffering..$2,000-$3,000

 

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Pain and Suffering
Calculations
• How much is pain and suffering worth?
• Do you look at
– Costs of psychological care?
– Damage awards from jury trials?

• Can you calculate a dollar value of pain
and suffering
– to the spouse of a murder victim
– a rape victim.
 

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How Much Crime Does an
Average Criminal Commit
• Estimates from criminologists vary from
a 12 to 180.
• Economists use a conservative 15 to 20
to estimate the usefulness of crime
control.

 

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The Net Result on the Question
of How Much Crime Costs
• At 15 crimes per year and $500 per
crime each criminal commits $7,500
worth of crime each year he is not in
jail.
• At 20 crimes per year and $3,000 per
crime each criminal commits $60,000
worth of crime each year he is not in
jail.
 

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Optimal Spending on Crime
Control
• While the “average” criminal may commit
$60,000 worth of crime and it costs only

$22,000 per year to keep them in prison, that
is not what an economist would use to make
the case.
• An economist would look at the benefit of
locking up one additional criminal and
compare that to the marginal cost of doing so.
This is called Marginal Analysis.
 

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Are the Right People in Jail?
• More than half of the prison population
in many states is incarcerated for drug
crimes.
• Does it make sense to have a
nonviolent person in prison?

 

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What Laws Should we
Rigorously Enforce
• The marginal benefit of arresting all
murderers or rapists is greater than the
marginal benefit of arresting all recreational
drug users and jaywalkers.
• The marginal cost of arresting only murders
and rapists is less than the marginal cost of
arresting all drug users and jaywalkers.
• Economists compare the marginal cost and
the marginal benefit of targeting particular
crimes.
 

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Marginal Cost and Marginal
Benefit
Marginal Costs
Marginal Benefits

MC

MB
Murders,  Rapists, Drug Dealers, Drug Users, Jaywalkers

 

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What is the Optimal Sentence?

• Death Penalty vs. Life in Prison without
Parole
– Death Penalty Costs
• Present value of extra adjudication
• Dollar value of executing the innocent

– Life without Parole Costs
• Present value of housing costs
• Present value of medical costs for an aged inmate.

– Economists generally agree that in monetary
terms, the death penalty costs more than life in
prison.

• Length of Sentence
– As sentences get longer

 

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• the marginal costs of adding another year to a sentence
grow (because of medical costs),
• the benefits  decrease (because
the older you are the
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