Fighting Crime

1
Fighting Crime

• Chapter 20

2
America's most unsafe Cities

• http//www.mibazaar.com/unsafecities/
• In 2005, St. Louis, Missouri (population 352,572)
  was the deadliest city in America, at 2405.5
  violent crimes per 100,000.
• Brick Township, New Jersey (population 7,119)
  ranked the safest city for having 55.9 violent
  crimes per 100,000. The overall violent crime
  rate in the United States was 469.2 per 100,000.
• Why do crime rates differ?

3
Reported Crimes per 100,000 Persons, 2005
4
Crime statistics

• FBIs Uniform Crime Reports tracks reported crime

• Violent crime
• Murders
• Non-negligent manslaughter
• Forcible rape
• Robberies
• Aggravated assault

• Property Crime
• Burglaries
• Larceny
• Theft
• Motor vehicle theft

5
Underreported crime

• Victimsmarginal benefit lt marginal cost
• They lack trust in police
• They hold themselves partly responsible
• Crime not serious enough
• Serial crime victims
• Police
• Fewer crimes reportedcrime rates reduced
• Only most serious act is reported for each
  incident

6
Crime statistics

• National incident-based reporting system (NIBRS)
• FBI
• Still under construction
• National Crime Victimization Survey (NCVS)
• Bureau of Justice Statistics
• Telephone interviews of 50,000 households

7
Defining crime

• Against persons
• Homicide, rape, kidnapping, assault
• Against property
• Theft, larceny, burglary, vandalism, arson,
  embezzlement, fraud
• Against the State
• Treason, counterfeiting, terrorism, tax fraud,
  regulatory violations, failure to pay parking
  meters, tearing labels off mattress

8
Defining crime

• Against rent-seekers
• Selling lemons that are too small, private
  delivery of Christmas cards or letters, selling
  gasoline below statutory minimum prices
• Against ones self (victimless crimes)
• Prostitution, consumption of illegal substances,
  sodomy

9
Economic theory of crime

• Rational choice theory (Becker 1968)
• Labor supply question
• People choose crime if perceived marginal benefit
  gt perceived marginal cost
• Criminals have different patterns of benefits and
  costs than noncriminals
• Traditionally used to explain property crime or
  selling illegal goods.

10
Marginal benefit to criminal

• Marginal benefit curve slopes downward
• Criminals rank crimes by expected pay-off (rate
  of return per unit of effort) and do them in
  order.
• As supply of stolen goods increases, the
  willingness-to-pay by the fence diminishes.

11
Marginal cost curve slopes upward

• Increased quantity of crimes requires more
  resources
• Same Method of Operation increases probability of
  being caught
• Costs include internal and external deterrents
• Internal deterrents guilt, self-restraint
• External deterrents
• Probability of getting caught ? probability of
  being arrested ? probability of being convicted ?
  probability of being sentenced
• Urban crime rates high because probability of
  recognition and arrest is lower

12
Market for crime (criminals perspective)
13
Table 201. Expected marginal benefits and
marginal costs of committing a burglary
14
Competing Theories of Crime

• Bad souls (pre 1700s)
• Deterrence theory Jeremy Bentham (1789)
• Hedonic (Hedonistic) calculus
• Age of Enlightenment
• Basis of rational choice theory

15
Sociological Theories of Crime

• Sociological explanation Income inequality and
  envy are the root of crime
• Relative deprivation Envy stems from unfair
  disadvantage
• Strain Envy because of frustration and failure
• Social disorganization Weak methods of social
  control. Feelings of alienation and anomie cause
  higher urban crime rates

16
Biology and crime

• Lombroso criminals are an accident of evolution
• Nature causes criminalitynot nurture, not free
  choice
• Criminals identified by large jaws, high
  cheekbones, and bony arches above deep-set eyes.
• Action-loving, aggressive personalities needing
  little sleep, easy to anger
• Chronic need for excitement due to genetic
  differences in their autonomic nervous systems.
• Extra XYY chromosome found in large proportion of
  prisoners (rather than XY) dyslogia (difficulty
  with verbal expression)

17
Biology and crime

• Complications during birth neo-natal problems
• Twins studies
• Biology predisposition or predestination?
• Solution for crime reduction based on biological
  theories (draconian)

18
Psychological theories

• Neo-Freudians Childhood without love
• Too much or not enough discipline
• Broken home
• Media Violence (but consider Japanese films)
• Yochelson and Samenow Mentally ill criminals
  adopted the tag to avoid jail.

19
Touch of Methodology

• What to believe?
• Good theories
• Internally consistent and logical
• More consistent with facts than rival theories
• Consistent with a general theory of behavior
• Economic theory of optimization
• People engage in an activity up to the point
  where perceived marginal benefits are greater
  than perceived marginal costs

20
Social costs of crime

• More than just property values estimated by
  hedonics
• Cost to victims (Cohen, 1990)
• Direct out of pocket costs
• Lost wages, medical expenses, stolen property
• Risk of death (probability of death multiplied by
  value of life)
• Costs of pain, suffering and fear

21
Table 202. The Cost of Crime to Each Victim,
including Attempted Crimes (2005 dollars)
22
Social costs of crime

• Crime is random, regressive tax
• Potential victims have low incentives to
  accumulate personal property
• Crime decreases GDP
• Large proportion of homeless are unemployable
  ex-felonssurvive only in illegal markets

23
Victims viewpoint

• Civil law settles disagreements among private
  parties.
• Plaintiff initiates an action against defendant.
• Criminal law deals with a wrong against the
  state.
• Only the state can prosecute, arrest, and punish.
  The immediate victim or family can only pursue
  legal action in civil court.
• As governments role increases in importance,
  victims lose importance.

24
Crime victims

• Potential victims place themselves under
  house-arrest while criminals run free
• Voluntary crime watch groups increase cost of
  crime to criminals
• Investment in private security systems
• Marginal Benefit decreased probability of being
  victimized x anticipated value of losses
• Potential victims first invest in activity that
  brings greatest marginal benefit per (per
  effort)

25
Market for Crime Protection (victims viewpoint)
26
Fear of victimization

• Fear
• Perceived vulnerability
• Previous experience as witness or as victim
• Social environment (Dont snitch mentality)
• Quality of support networks
• Attitudes toward police
• Self-defense capabilities
• Stereotypes of individuals or groups

27
Crimes of Passion

• Recently economists use rational choice theory to
  analyze crimes of passion
• Hate crimes (Glaeser, 2005)
• Riots (DiPasquale and Glaeser, 1998)
• Domestic violence (Witte, 1996)
• Murder (Donohue and Levitt, 2001) for one

28
Economic theory of hate

• Rational choice model Political gains determine
  the supply of hatred. Time spent hearing about
  the past (or future) atrocities of the offending
  group increases supply.
• The demand for hatred (listen to hate speech )
• Messages seem to contain potentially useful
  information about hostile groups
• Messages often subsidized, attention-grabbing.

29
Economic theory of hate

• Hate crimes are committed by those who consider
  themselves to be victims when minority groups
  threaten the superiority of their social status.
• Individual hatred becomes collective if
• members of the victims group must identify
  with the victim, and
• must decide that all members of the targeted
  group are collectively guilty.

30
Economic theory of hate

• The rational choice approach assumes that
  individuals who commit hate crimes maximize a
  two-good utility function
• hate behavior
• a composite of all other goods.
• The utility functions of the haters depend
  negatively on the well-being of the target group
• Haters are happy to reduce their own consumption
  of the composite goods if the consumption of
  their target is reduced even more.

31
How to counter hate crimes?

• Build a case to hate the haters.
• Based on esteem theory (Dharmapala and McAdams,
  2005)
• The opinion of others is important. Publicity
  allows the perpetrator to achieve the desired
  fame.
• The greater the probability that a crime will be
  publicized, the higher will be the potential
  offenders expected utility from the crime.
• Thus, restrictions on reporting hate crimes may
  reduce the incentives to commit these crimes.

32
Economic Theory of Riots

• DiPasquale and Glaeser (1998) Only the private
  costs and benefits determine whether individuals
  participate.
• The benefits of the group (of rioters) are
  important only because of a link between them and
  private benefits to each rioter.
• Stolen goods and merchandise,
• Political benefits internalized by individuals
  within the group
• Costs
• The opportunity costs of time
• Likely costs of punishment

33
Economic Theory of Riots

• Marginal benefit curve for rioting slopes
  downward a larger number of rioters reduces the
  benefits that the marginal rioter receives from
  joining in.
• Marginal cost
• few rioters marginal costs are constant and
  higher than the benefits because it is easier to
  be identified and apprehended.
• Because there is protection in numbers, marginal
  cost curve mainly slopes downward
• the marginal rioter has a lower risk of being
  arrested because of anonymity and congestion for
  law enforcement.

34
The costs and benefits of rioting
A
B
C
35
Three possible equilibria

• Point A No riot. Probability of being arrested
  is large, so MCgtMB for the individual.
• Point B Unstable equilibrium (since MC cuts MB
  from above). Moderate probability of being
  apprehended. Minimum size of riot. One less
  personconvergence to A. One more, convergence to
  C.
• Point C Stable equilibrium requires a large
  number of rioters who each have a low probability
  of being arrested.

36
Domestic Violence

• Assailants and victims both engage in
  benefit/cost analysis
• Assailants
• exercise control over their partners behavior
• lack self-esteem
• cling to traditional gender roles

37
Domestic Violence

• Victims cost of reporting may mean incarcerating
  family breadwinner
• Increase costs to the batterer exist when women
• have a legal support network
• have higher incomes or work outside the home.
• Domestic violence declines as costs to assailant
  increase.

38
Murder

• Deterred by
• Capital punishment
• Crack down on small crimes (Broken Window
  Hypothesis)
• Abortion (Donohue and Levitt, 2001)

39
Broken Window Hypothesis

• Hierarchy of crime in a neighborhood
• Graffiti, to
• Vandalism, to
• Murder.
• If broken windows are not fixed, vandals continue
  to break windows.
• If nothing is repaired, law-abiding citizens
  abandon the street to troublemakers.

40
Abortion affects future murder rates

• Very controversial!
• Legalized abortion decreased adolescent
  childbearing and illegitimate births
• Unwanted, neglected children have high
  probability of becoming criminals. Legalized
  abortion decreases the number of unwanted births.
• Twenty years after abortions were legalized,
  criminal activity significantly declined (Trend
  found in U.S., Canada, Australia)

41
Victimless Crimes

• People willingly become involved in activities
  that others think are harmful or immoral.
• Prostitution (Edlund and Korn, 2002)
• Rational addiction (Becker and Murphy, 1988)

42
Prostitution

• Illegal, tolerated, legal depends on
  jurisdiction
• Supply of prostitutes analyzed similar to the
  supply of labor for any other occupation.
• If men do not want to marry former prostitutes,
  then the opportunity cost to the woman is the
  probability that a potential spouse will find out
  about her background.
• The compensating wage differential falls with the
  probability of being discovered.

43
Prostitution

• Both supply and demand for prostitutes is
  sensitive to the risk of discovery and social
  stigma associated with arrest and conviction.
• Neighborhoods increase marginal costs by name
  and shame techniques.
• Districts that implement zero-tolerance
  initiatives do nothing but change the location of
  the market.

44
Mood modifying substances

• Arguments for prohibition
• Irrational consumers
• not well informed, or
• they are myopic.
• Negative externalities
• Not victimless crime others are harmed by the
  consumption of the good.

45
Mood modifying substances

• Arguments against prohibition
• Consumption of an addictive good is rational.
• Prohibition violates freedom of choice.
• How far should government go to dictate healthy
  behavior?

46
Rational Addiction

• Addiction is defined as a habit where past
  consumption influences the utility from present
  consumption.
• Positive and negative addictions
• The problem with harmful addiction is that the
  actions (revealed preferences) of addicts do not
  match their words (stated preferences).
• Economic theory is grounded in free choice, so
  can it explain addictive behavior?

47
Rational Addiction

• Becker and Murphy (1988)
• Addictive behavior is rational, but more complex
  two components
• reinforcement (past consumption)
• tolerance
• Current utility depends on
• current consumption of the addictive good,
• current consumption of a nonaddictive good and
• the stock of the addictive capital (the summation
  of all the quantities of the addictive good
  previously consumed)

48
Rational Addiction

• Tolerance requires ever greater quantities to
  achieve the same level of utility.
• Larger amounts consumed today decrease future
  satisfaction because it will increase the
  necessary amount of future consumption

49
Rational Addiction

• Reinforcement greater past consumption increases
  the desire for present consumption.
• Reinforcement requires that todays pleasure must
  outweigh the harm they expect in the future.
• People who become addicted heavily discount the
  future.

50
Rational Addiction

• Total cost of an addictive good is the sum of
• The goods price
• The value of future adverse effects on health and
  well-being.
• Increasing the current monetary price or
  increasing the amount of information about future
  hazards reduces both short-run and long-run
  consumption.

51
Rational Addiction

• Myopic consumers value the present more than they
  value the future and respond more to changes in
  the monetary price than to potential future
  health problems.
• As people age or as incomes rise, they are more
  concerned about future health.

52
Would prohibition work?

• In economic terms, strict prohibition may be
  warranted if the external marginal costs are so
  great that no consumption can be tolerated
• If marginal cost starts at limit price of demand
  curve
• If the major externality is social disapproval
• Compare value of social disapproval to value of
  increased utility of users of substances.
• Interdependent utility functions
• Comparing interpersonal utilities (See Chapter 16)

53
Externality Analysis of Mood Modifying Substances
54
Should We Legalize Drugs?

• War on drugs isnt working
• Relative inelasticity of demand
• Decrease supply
• Prices increase substantially
• Benefit to surviving dealers
• Quantity decreases by just a little
• Desperate addicts turn to more violent crime to
  get money
• High cost of prosecuting drug-related crimes

55
Effect of Supply-Based Drug Policies
56
Should We Legalize Drugs?

• Legalize drugs
• Retail price will drop, quantity demanded will
  increase
• Arguments for prohibition apply to alcohol and
  cigarettes, and Prohibition did not work.
• Effect on demand?
• May increase because good is now legal
• May decrease because legal good loses rebel
  status
• Before opium was made illegal in the US, the
  proportion of opium addicts was negligible. Why
  would the proportion differ now?

57
Organized Crime

• Organized crime groups
• quasi-governments, similar to predatory states,
• emerge from absence of state enforcement
  (geographic, social, ethnic, ineffective or on
  illegal substances)
• Follow a traditional hierarchical organization.
• Urban gangs are mercenaries that offer protection
  to their clients

58
Organized Crime

• Monopolizes criminal activity
• Quantity of crime (number of victims) decreases,
• Severity of crime increases to drive out petty
  (perfectly competitive) criminals

59
Organized Crime and the Market for Crime
60
Crime reduction

• Cost of doing crime is function of
• probability of apprehension x probability of
  conviction x probability of punishment
• Optimal crime prevention budget

61
Deterrence

• Specific deterrence acts on individual.
  Incarcerated individuals cannot easily commit
  crimes on the outside from their prison cell.
• General deterrence acts on all potential
  criminals who re-estimate the probabilities of
  getting caught and punished.

62
Philosophies of Punishment

• Pragmatism proposes that society should choose
  the most efficient and least expensive means
  possible.
• Vengeance and retribution are required for
  justice Concept is based on an eye for an eye
  philosophy. Punishment is consolation for the
  victim.
• Rehabilitation therapy will alter the internal
  deterrents of the criminal so much that the
  marginal cost of committing crime becomes
  prohibitive. Person must agree that he or she has
  antisocial behavior.