Abstracts: July 5th, 2001

By Ricardo Lagos.The author examines the usefulness of economics in the fight against crime. Many industrial countries have responded to steadily rising crime by pouring money into extra policing in order to catch more criminals and then sent more of those they catch to jail and for longer periods. But this approach is now being questioned. Economists have become increasingly convinced that economic incentives may be a crucial determinant of criminal involvement, at least in property crime.

From an individual’s point of view, a key element entering the criminal decision must be the rate of return on illegal activities relative to the rate of return on legitimate ones. The expected pay-off depends on the size of the reward, the probability of being caught and convicted; and the severity of the punishment. Evidence from the US, where property crime has decreased, shows that influencing factors were increased spending on the police, which increased the likelihood of being caught and the increase in the real wage.

The unifying principle of this approach is that underlying most crimes and criminal careers there is an individual evaluating costs and benefits. Understanding how criminals respond to economic incentives could therefore provide new and useful policy tools for the fight against crime.

Publiished by Centre for Economic Performance, London School of Economics.http://www.centrepiece-magazine.com/autumn2000/Lagos.htm