Working Paper: CEPR ID: DP15899
Authors: Steffen Andersen; Gianpaolo Parise; Kim Peijnenburg
Abstract: We explore the impact of health shocks on criminal behavior. Exploiting variations in the timing of cancer diagnoses, we find that health shocks elicit an increase in the probability of committing crime by 13%. This response is economically significant at both the extensive (first-time criminals) and intensive margin (reoffenders). We uncover evidence for two channels explaining our findings. First, diagnosed individuals seek illegal revenues to compensate for the loss of earnings on the legal labor market. Second, cancer patients face lower expected cost of punishment through a lower survival probability. We do not find evidence that changes in preferences explain our findings. The documented pattern is stronger for individuals who lack insurance through preexisting wealth, home equity, or marriage. Welfare programs that alleviate the economic repercussions of health shocks are effective at mitigating the ensuing negative externality on society.
Keywords: Economics of crime; Health shocks; Human capital; Event study
JEL Codes: I12; K42
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Cancer diagnosis (I11) | Probability of committing a crime (K42) |
| Cancer diagnosis (I11) | Economic motivation (seeking illegal revenues) (K42) |
| Cancer diagnosis (I11) | Survival probabilities channel (lower expected cost of punishment) (C41) |
| Cancer diagnosis (I11) | Criminal behavior (first-time criminals and reoffenders) (K42) |
| Lacking insurance or financial buffers (G52) | Impact of cancer diagnosis on crime (K42) |
| Cancer diagnosis (I11) | Probability of committing a crime (long-term effect) (K42) |