Crime and Economics Chapter 8 Pages 197210

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Crime and EconomicsChapter 8 (Pages 197-210)

• Dan Hunter

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Types of Crime

• Property Crime Crimes that include theft,
  burglary, and motor vehicle theft.
• Violent Crime Crimes that include murder, rape,
  and simple and aggravated assault.

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Figure 8.1 (page 199)
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Public Goods

• Public Good A good that is nonexcludable and
  nonrival.
• Nonexcludable Good A good that is
  impossible or extremely difficult to exclude
  nonpayers from consuming.
• 2. Nonrival Good A good that one person can
  consume without reducing the amount available
  for others to consume.

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Public Goods

• The government may be able to provide a public
  good more effectively than the private sector for
  at least three reasons.
• It is costly to exclude people from the benefits
  of a public good.
• Monitoring the use of public goods may create
  private costs.
• 3. Private provision of a public good, like
  security or national defense, may be economically
  inefficient.

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Analyzing Crime

• Economists are willing to assume that criminals,
  just like law-abiding citizens, are systematic
  evaluators of the feasible choices before them.
• Economists also assume people are willing to
  substitute among goods.
• Economists also think of people as creative and
  resourceful.
• The implication is that, given a large enough
  compensation, many people will take actions that
  they ordinarily would not choose to take.

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Why Do People Commit Crimes?

• An individual commits a crime when the expected
  marginal benefit of the crime is greater than the
  expected marginal cost.
• The marginal benefit is the material or
  psychological reward coming from the crime.
• The marginal cost is the material or
  psychological cost of the decision.

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Dealing with Crime

• Imprisonment decreases crime because
• 1. Offenders tend to repeat their criminal
  activity, and they will not be able to while they
  are locked up.
• 2. An imprisoned criminal is not immediately
  replaced by a new offender.
• 3. Imprisonment does not increase after-prison
  criminal activity.
• 4. It raises the cost of committing a crime.

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Dealing with Crime

• Better people Improving the economic and
  social environment for children is a long-term
  strategy for crime control.
• A well-educated person with good job skills faces
  a higher cost of crime than does a person with
  poor job skills.
• People in an economy with good employment
  opportunities face higher costs of crime.

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Free Riders

• A free rider is a person who uses goods or
  services provided by others without paying for
  them.
• People have a tendency to be free riders.
• Because people tend to be free riders, the
  government taxes everyone in order to provide the
  service as a public good.

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The Economic Approach

• An economic approach to crime control implies
  that government can control crime, particularly
  property crime, because it can create conditions
  in which crime does not pay.

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If Crime Can Be Controlled, Then Why Does It
Still Exist?

• The feeling of security increases as the
  probability of being a crime victim decreases
  from 63 to 62 percent for a particular time
  period.
• The feeling of security also increases as that
  probability decreases from 3 percent to 2
  percent. Most people would not value the second
  decreases as much as they value for the first
  decrease.

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Cost of Reducing Crime

• To reduce crime, more resources must be devoted
  to crime control.
• It takes more resources to reduce crime by a
  given amount if the crime rate is already low
  than to reduce it by the same amount if the crime
  rate is high.
• As the amount of crime falls, reducing it further
  eventually requires an assault on our freedom.