The socially efficient level of crime
Bobby Han
The Nobel Laureate Gary Becker (1930-2014) is considered as the first economist to undertake rigorous microeconomic analysis on social issues including crime and racial discrimination. His seminal contribution ‘Crime and Punishment: An Economic Approach’ has narrowed the gap between the two disciplines of economics and criminology. Economics now plays a decisive role in designing and evaluating criminal policies to reduce crime rates and achieve a socially efficient level of crime (Philip J. Cook, Stephen Machin, Oliver Marie, Giovanni Mastrobuoni, 2013). In economics, social efficiency can be defined as the optimal distribution of resources among the society, taking into account all of the private and social costs and benefits. In terms of crime, in order to determine the optimal distribution of resources, including criminal prevention and punishment that can maximize the social welfare and achieve the optimal level of crime, it is crucial to analyse and evaluate the costs and benefits of committing crime to both individuals and the society. There are three main types of criminal offences in society: personal, property and statutory crimes. Personal crimes are those which cause physical or mental harm to another individual, for example, homicide and sexual offences. Property crimes relate to the destruction of the property of another individual such as theft and robbery. And statutory crimes are those which contravene statute law, and which include the personal and property crimes mentioned above, but also others, such as drug or traffic offences (Justia, 2018). By applying the knowledge of microeconomics to justify those reasons for a criminal offence, it is essentially evaluating the benefits and costs of committing a crime from the standpoint of a criminal. Behavioural economics is becoming more and more important in the analysis criminal behaviour in order to design the most effective criminal policies to determine the socially optimal level of crime (F. van Winden, E. Ash , 2012). In behavioural economics, it is assumed that all individuals have bounded rationality and bounded self-control. The slow, complicated and effortful way of making decisions (system2) requires a lot of attention and self-control. Therefore, many economic decisions will be taken in an intuitive, automatic, and effortless way (system 1). However, system 1 is highly influenced by cognitive biases and heuristics during the decision-making process, and is therefore is prone to make systematic errors (Kahneman, 2011). For example, the glorification of violence in media, including films, tv series and video games, could possibly influence teenagers to commit a serious personal crime like stabbing. Therefore, the current crime level is likely to be above the socially optimal level since some of the criminal offences would be an irrational and intuitive system 1 decision made by those whose temptation overcomes morality. Another model is based on the classical economic theory, which assumes that all economic agents including individuals are rational decision-makers. This means criminals aim to make an optimal decision that maximizes their utility based on a fully rational cost-benefit analysis. For rational criminals, committing a crime is the most beneficial choice when compared to the opportunity cost of not committing a crime. Taking an example of theft crime, rational thieves would weigh up their benefits, in this case it would be the value gained from the property that they have stolen from, as
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