Chapter 24 The Economics of Crime

Chapter 24The Economics of CrimeChapter OutlineWHO COMMITS CRIME AND WHYTHE RATIONAL CRIMINAL MODELTHE COSTS OF CRIME OPTIMAL SPENDING ON CRIME CONTROLWho Commits Crime and WhyDisproportionately to their percentage in the population crime is committed by Men The youngThe poorThe socially disadvantagedSources of Crime StatisticsPolice reportsPotentially subject to police biases against minorities.Victim accountsNot subject to bias because it is in the interest of a victim to give an accurate description of the perpetrator. The ResultWhether 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.The Rational Criminal ModelBecker’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.Implications of the RCMPeople 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.Evidence in favor of the RCMLess 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.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.Evidence against the RCMChallenges to the Basic Assumptions of the RCMWhile property and drug crimes can be seen through the expected “cost-benefit” 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.Costs of Crime$93 billion is currently spent on the criminal justice system (police, courts and prisons)There are nearly 14 million crimes1.8 million violent12 million non-violentApproximately 14 million more are unreportedHow Much Does an Average Crime CostTypes of costsItems taken or damagedLost income of victimsPsychological damage or “pain and suffering”Costs per crime estimatesIgnoring Pain and Suffering ..$500Including Pain and Suffering..$2,000-$3,000Pain and Suffering CalculationsHow much is pain and suffering worth?Do you look atCosts of psychological care?Damage awards from jury trials?Can you calculate a dollar value of pain and suffering to the spouse of a murder victima rape victim.How Much Crime Does an Average Criminal CommitEstimates from criminologists vary from a 12 to 180.Economists use a conservative 15 to 20 to estimate the usefulness of crime control. The Net Result on the Question of How Much Crime CostsAt 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.Optimal Spending on Crime ControlWhile 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.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?What Laws Should we Rigorously EnforceThe 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.Marginal Cost and Marginal BenefitMarginal CostsMarginal BenefitsMCMBMurders, Rapists, Drug Dealers, Drug Users, JaywalkersWhat is the Optimal Sentence?Death Penalty vs. Life in Prison without ParoleDeath Penalty CostsPresent value of extra adjudicationDollar value of executing the innocentLife without Parole CostsPresent value of housing costsPresent 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 SentenceAs sentences get longer the marginal costs of adding another year to a sentence grow (because of medical costs), the benefits decrease (because the older you are the less likely you are to commit crime.