The economics of crime, reading response:
The paper “ Crime and Punishment: An economic approach” examines the economic implications of crimes within the US as millions of crimes are reported each year. The commonness of crimes can also be reflected from the tremendous employment in protective service (e.g. fireman. Police, private guards etc.) 1964 to 1998 and as well as the increasing private security budget.
The economics of crime is related to poverty, social exclusion and economic problems, this can be most directly examined through identifying the actors contributing to crime rates. Crimes are disproportionately committed by individuals with minimum education or within a disadvantaged group within society. The research identifies an age-crime curve as youths between the age of 16-18 having the most incentives of committing crimes.
Research had encountered issues when disputes were aroused around the definition of crime, whether one illegal activity should account for multiple crimes depending on the scale. Moreover, inconsistencies came across as the paper wanted to account for crime rates. Three methods of accounting all have its defects, if crime rates is accounted through surveying people the answers could be dishonest; if crime rates is accounted through recorded crimes it excludes the amount that were unreported or dismissed; however, if accounted for self reported crimes it may also have recall bias diminishing its accuracy.
Importantly, the geographical concentration of crimes are also examined besides the ages or races of actors. According to the social interaction model, an individual’s tendency of committing crime depends on peers and neighbor’s actions, and thus resulting in certain geographic areas with higher crime rates. As shown in a research by Sampson et al. (1997), they interviewed neighbors and surveyed them on questions as to whether they “share the same values…” and used their responses to create an index of “collective efficacy”.
Lastly, the author concluded that crime also affects the economic cycle considering the undesirability of criminals within the job market after their return. This is an interesting conclusion since as mentioned before in the benefit-cost framework, individuals choose to commit crime because they are generally paid higher (eg. drugs); however, if that individual is incarcerated then released and searching for a job within the job market, their incarceration history generally lowers their salary from the average applicant, therefore actually undermining their return from the crime.
Insights:
- Generally speaking, the individual wealth and potential return from crime may be the most direct factors determining whether a crime is committed. Although it would be rational to conclude that given these logic, crime would be less frequent under prosperous economy; this also largely depends on the scale of inequality existing within that economy, as more inequality lead to more crime
- In the past, social trust was used to influence the likelihood of crime within a community
- Since criminals are generally less desired to be employed in society, and as unemployment leads to more crime, this yields a deadly cycle whereas once incarcerated, a replenishment to the economy is unlikely despite them being released.
- For the conclusion of this reading, it also signals that people with incarceration history are “dispensed” instead of re-utilized, and thus more likely to have a negative impact on the economy than a positive one.
Reference:
Freeman B. Richard (1999). Economics of crime: https://webspace.qmul.ac.uk/fcornaglia/economics%20od%20crime.pdf
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