The socially efficient level of crime
of crimes against individuals takes up more than £50bn compared to only £8.7bn against businesses. Violent crimes against individuals account for largest proportion of estimated total cost.
Source: the total estimated cost of crime in £bn from 2004/05 to 2015/16 by Home Office (Matthew Heeks, Sasha Reed, Mariam Tafsiri and
Stuart Prince, 2018)
The graph above shows that the total estimated cost of crime in England and Wales has decreased during a 12-year-period between 2004/05 and 2015/16 by more than 40%. The decline in the cost of crime is largely as a result of the falling crime rates, which can be explained by the cost-effective crime prevention policies with a net social benefit, which indicated that the UK is moving towards the socially efficient level of crime. Firstly, the number of police officers has increased considerably by approximately 20,000 from 2000 to 2005 to combat high crime rates in the UK (Grahame Allen, Lukas Audickas, 2020). Studies have found that the number of police resources had a strong negative correlation with the crime rates in the UK (Marie, 2010), which suggests that the initiative of adding police resources has net social benefits and therefore has helped to reduce the total social costs of crime. Moreover, the number of prisons in England and Wales has quadrupled in size between 1900 and 2017, and reached approximately 80,000 prisoners at the present (Sturge, 2020). It can be argued that imprisonment has helped to reduce the crime rate by preventing offenders from committing more crimes, as well as deterring potential criminal behaviours present in the society (Marie, 2010). Furthermore, the government expenditure on education has increased dramatically to 5.5% of GDP in 2010-11 (Bolton, 2019). This improves the human capital and hence the increasing opportunities to earn higher wages, so that the crime participation is reduced and therefore the social costs decrease as well. In conclusion, economics is about the study of incentives, and economists would like to see how criminals respond to a specific criminal policy in order to determine the optimal amount of resources that need to be allocated into the prevention of crime to reduce the total social costs and increase the social net benefits. When one unit £ spent on crime fighting schemes (catching, punishing and prevention) reduces the net cost of crime by more than a unit £, then the government should increase the expenditure on law enforcement and vice versa. The socially efficient level of crime would be
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