Economic calculation

Trejo may now be clean but there is still one addiction in his life. “I love working,” he says, though this is partly because he has concluded that crime really doesn’t pay. “I realised that if I rob someone for $800, that may only take two minutes – but the other price is probably five years in prison. If you divide $800 into five years, it’s not a very good hourly wage.”

The level of punishment times the probability of punishment is the cost of crime.

Which does mean that if you raise the probability of punishment then you can reduce the duration of it. A guaranteed week inside for burglary might do more to reduce the incidence than 10 years applied to only 1% of those who do it.

11 comments on “Economic calculation

  1. Getting pinched has a huge effect. 50% of criminals are never seen again.

    I think a lot of criminals think they’ll be lucky. When they get caught, reality bites.

  2. Opportunity costs. The lure of easy money – e.g. drug dealing – causes people to stop their personal development.

    Lax courts meting out no consequences for criminal behavior leads to escalating crimes, culminating in murder. Peer groups form.

    See: Chicago – 765 murders in 2016.

    Prison isn’t just for the perp; it’s a notice to everyone else what will happen if they break bad.

    Most of the murderers in Chicago had the potential to be good people.

  3. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3145287

    What Caused the 2016 Chicago Homicide Spike? An Empirical Examination of the ‘ACLU Effect’ and the Role of Stop and Frisks in Preventing Gun Violence
    Homicides increased dramatically in Chicago in 2016. In 2015, 480 Chicago residents were killed. The next year, 754 were killed–274 more homicide victims, tragically producing an extraordinary 58% increase in a single year. This article attempts to unravel what happened.

    This article provides empirical evidence that the reduction in stop and frisks by the Chicago Police Department beginning around December 2015 was responsible for the homicide spike that started immediately thereafter. The sharp decline in the number of stop and frisks is a strong candidate for the causal factor, particularly since the timing of the homicide spike so perfectly coincides with the spike. Regression analysis of the homicide spike and related shooting crimes identifies the stop and frisk variable as the likely cause. The results are highly statistically significant and robust over a large number of alternative specifications. And a qualitative review for possible “omitted variables” in the regression equations fails to identify any other plausible candidates that fit the data as well as the decline in stop and frisks.

    – The econometrics are not robust in this – one cannot draw conclusions from a single year in a single city.

  4. Dear Mr Worstall

    What is the effect of a potentially high sentence to the burglar if he’s caught by the occupants? If he’s facing 10 years, the incentive to resist arrest may be high to the extent of a bit of GBH to avoid it, whereas a lesser time in jail may make it not worthwhile braining the occupant(s) to effect an escape – “fair cop, guv. I’ll come quietly …”

    DP

  5. Quite so, encapsulated in the “May as well be hung for a sheep as a lamb”

    The answer to that being lower sentences alongside greater probability of being caught.

  6. ‘What is the effect of a potentially high sentence to the burglar if he’s caught by the occupants?’

    The American way is to just shoot him did.

    It eliminates all the justice (sic) system games.

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