Working Paper: CEPR ID: DP5293
Authors: Louis Hotte; Tanguy Van Ypersele
Abstract: We revisit the question of the efficiency of individual decisions to be protected against crime for the cases of both observable and unobservable protection. We obtain that observable protection is unambiguously associated with a negative externality and that at the individual level, it has a deterrence effect but no payoff reduction effect. Unobservable protection has a global deterrence effect and is associated with a private payoff reduction effect but no private deterrence effect. A decrease in the global crime payoff is detrimental to a victim if protection is observable, while it is beneficial with unobservable protection. While protection has a positive diversion effect when observable, it has the equivalent of a negative diversion effect when unobservable.
Keywords: Crime; Efficiency; Private Protection
JEL Codes: D62; D82; K42
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| observable protection (C90) | negative externality (D62) |
| observable protection (C90) | decrease in global crime payoff (K42) |
| observable protection (C90) | no payoff reduction for individual (G59) |
| unobservable protection (G52) | positive external effect (D62) |
| unobservable protection (G52) | decrease in global crime payoff (K42) |
| unobservable protection (G52) | benefits victims (H84) |
| unobservable protection (G52) | inefficiently high crime levels (K42) |
| observable protection (C90) | oversupply in decentralized equilibrium (D59) |
| observable protection (C90) | excessively low crime levels (K42) |