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Economics of Crime Victoria Vernon, Ph.D. Empire State College
Examples of economic questions in this course: ,[object Object],[object Object],[object Object],[object Object],[object Object]
Outline for  Today ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
What is Economics? ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
How do we make choices?  (Economics Philosophy) ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Rational decision example:  Go to college? ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Rational decision example:  Steel a car? ,[object Object],[object Object],[object Object]
choice Work and  no violence Work and brawl in bars expect $ 24,000 /yr Apprehended:  $ 22,000 lose 1 month in court and jail 0.1 0.9 Not apprehended $ 24,000 Expected income:  0.1*$22,000  +  0.9*$24,000  =  $23,800 Expected cost:  $200 Compare benefit and cost. Rational choice: brawl in bars?
What is Crime? Illegal activity. ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Crime?  ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
                                                            [   Serious violent crimes : rape, robbery, aggravated assault, and homicide Bureau of Justice Statistics,  http://ojp.usdoj.gov/bjs/glance/cv2.htm
[object Object],[object Object]
[object Object],[object Object],[object Object]
How is Crime Measured ,[object Object],[object Object],[object Object],[object Object]
 
[object Object],[object Object],[object Object],[object Object],[object Object]
 
 
February 28, 2008     
 
 
 
 
 
 
Public Sector Health Safety Civics Education
Victim’s Income Thief’s Income ,[object Object],[object Object],[object Object]
Victim’s Income Thief’s Income $6,000 $6,000 Income Distribution $12,000 Total or Social Income Line: Thief’s + Victim’s Income $12,000 Income Redistribution $9,000 $3,000 ,[object Object],[object Object],[object Object]
Victim’s Income Thief’s Income $6,000 $6,000 Income Distribution $12,000 Total or Social Income Line: Thief’s + Victim’s Income $12,000 Income Redistribution $9,000 $3,000 $11,000 $1,000 social cost of defense $11,000 ,[object Object]
What is the nature of crime? ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Total Costs of Crime for Society ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Choice Legal work Illegal work Unemployed (fail) Employed (succeed) Apprehended (fail) Not Apprehended (succeed) Example of rational choice: Legal Work or Illegal Work?
Expected legal Income = 0.9*$12,000 =  $10,800 Legal Work or Illegal Work?  Choice with  Uncertain  Outcomes Choice Legal work Illegal work Unemployed (fail) Employed (succeed) Apprehended (fail) Not Apprehended (succeed) 0.1 0.9 $0 $12,000/yr 0.2 0.8 $0 $14,000/yr Expected illegal income = 0.8*$14,000 =  $11,200
Expected legal Income = 0.95*$12,000 =  $11,400 Choice Legal work Illegal work Unemployed (fail) Employed (succeed) Apprehended (fail) Not Apprehended (succeed) 0.1 0.9 $0 $12,000/yr 0.2 0.8 $0 $14,000/yr Expected illegal income = 0.8*$14,000 =  $11,200 0.05 0.95 Reduce crime:  Maintain a full-employment economy
Expected legal Income = 0.9*$12,000 =  $10,800 Choice Legal work Illegal work Unemployed (fail) Employed (succeed) Apprehended (fail) Not Apprehended (succeed) 0.1 0.9 $0 $12,000/yr 0.2 0.8 $0 $14,000/yr Expected illegal income = 0.7*$14,000 =  $9,800 0.3 0.7 ,[object Object],[object Object]
Expected legal Income = 0.9*$12,000 =  $10,800 Choice Legal work Illegal work Unemployed (fail) Employed (succeed) Apprehended (fail) Not Apprehended (succeed) 0.1 0.9 $0 $12,000/yr 0.2 0.8 -$3,000 (fine) $14,000/yr Expected illegal income = 0.8*$14,000 - 0.2*$3,000 =  $10,600 $0 ,[object Object],[object Object]
Summary ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

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Crime1

  • 1. Economics of Crime Victoria Vernon, Ph.D. Empire State College
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  • 8. choice Work and no violence Work and brawl in bars expect $ 24,000 /yr Apprehended: $ 22,000 lose 1 month in court and jail 0.1 0.9 Not apprehended $ 24,000 Expected income: 0.1*$22,000 + 0.9*$24,000 = $23,800 Expected cost: $200 Compare benefit and cost. Rational choice: brawl in bars?
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  • 11.                                                          [ Serious violent crimes : rape, robbery, aggravated assault, and homicide Bureau of Justice Statistics, http://ojp.usdoj.gov/bjs/glance/cv2.htm
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  • 19. February 28, 2008     
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  • 26. Public Sector Health Safety Civics Education
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  • 32. Choice Legal work Illegal work Unemployed (fail) Employed (succeed) Apprehended (fail) Not Apprehended (succeed) Example of rational choice: Legal Work or Illegal Work?
  • 33. Expected legal Income = 0.9*$12,000 = $10,800 Legal Work or Illegal Work? Choice with Uncertain Outcomes Choice Legal work Illegal work Unemployed (fail) Employed (succeed) Apprehended (fail) Not Apprehended (succeed) 0.1 0.9 $0 $12,000/yr 0.2 0.8 $0 $14,000/yr Expected illegal income = 0.8*$14,000 = $11,200
  • 34. Expected legal Income = 0.95*$12,000 = $11,400 Choice Legal work Illegal work Unemployed (fail) Employed (succeed) Apprehended (fail) Not Apprehended (succeed) 0.1 0.9 $0 $12,000/yr 0.2 0.8 $0 $14,000/yr Expected illegal income = 0.8*$14,000 = $11,200 0.05 0.95 Reduce crime: Maintain a full-employment economy
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