Working Paper: NBER ID: w31786
Authors: W. Bentley Macleod
Abstract: Abstract This paper extends the Becker (1968)-Ehrlich (1973) model of crime to allow for government transfers. Using the Shapiro and Stiglitz (1984) model, it is shown that one can view deterrence as a tax on (criminal) labor supply. That in turn allows an integration of a crime model with a standard public finance model. Using King et al. (1988) preferences, it is shown that when individuals are needy or desperate the income effect may dominate the substitution effect. The is that policies undertaken with the intent of deterring crime may, unintuitively, lead to an increase in crime. This provides an alternative to to Becker (1968)'s explanation for persistent crime levels. The results are also consistent with recent research showing that extending social welfare programs can reduce crime. Finally, the policy that minimizes net social costs is characterized by a combination of deterrence and transfers to reduce inequality. This result illustrates how Posner (1973)'s criteria of wealth maximization can imply that reducing inequality is a part of optimal crime policy.
Keywords: deterrence; inequality; crime; government transfers
JEL Codes: J20; K14; K40
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Deterrence (K42) | Crime Rates (K42) |
| Inadequate Government Transfers (H53) | Increased Criminal Behavior (K42) |
| Higher Inequality (D31) | More Crime (K42) |
| Increased Transfers (H87) | Decreased Criminal Activity (K42) |
| Deterrence + Transfers (F16) | Reduced Inequality (I14) |