Mainstreaming Methodology for Estimating Costs of Crime
The classical foundation for interest in an ‘economic’ view of criminal justice and the role of criminal sanctions is (Beccaria 1767). Another pre-Becker source discussing the extent to which punishment is explained by general deterrence is (Andenaes 1966).
Contemporary work on the economics of crime has for the most part been inspired by the paper by (G. S. Becker 1968). This path-breaking work developed the idea that the decision to commit a crime could be looked at in the same way as other kinds of decisions, namely by comparing an action’s costs and payoffs. A prospective criminal weighs the subjective costs and benefits from offending and goes ahead if the net benefits are positive. The benefits are the pay-off from the offence whilst the costs are primarily the product of the probability of being caught and the scale of the sanction to be expected in the event of being caught: (R. Cooter, T. Ulen 2007). This gives rise to a deterrence-based approach in which a sufficiently well-tailored set of sanctions could be implemented to pre-empt virtually all offences.
It is not always appreciated that this approach relies on there being information about the costs of crime. If the losses from an offence cannot be readily assessed then it is much more difficult to determine an appropriate set of sanctions for it and the degree of priority it is to be accorded within the Criminal Justice System.
Many aspects of the Becker model have been pursued in the literature. Becker & Stigler (Stigler 1974) expand on Becker’s 1968 seminar article to discuss incentives for enforcers. (Polinsky and Shavell 1984) develop the model of optimal law enforcement with different risk behaviour. (Polinsky and Shavell 1984) expand the model of optimal law enforcement to non-
monetary sanctions and show that imprisonment should be used infrequently. Posner (1980a) applies the economic model to white-collar crime. Posner (1980b) discusses the economic model from the perspective of retribution and related theories of punishment. (Posner 1985) goes beyond the model of optimal law enforcement, proposing an economic theory of substantive criminal law in particular with respect to torts and other wrongdoings. (Stigler 1970) introduces marginal deterrence as a goal of punishment and thereby disproves the results of Becker’s 1968 seminal paper with respect to maximal fines. (Shavell 1985) proposes a comprehensive economic theory of non-monetary sanctions.
For a quick introduction to criminal law and economics see (Eide 2000) or (Mookherjee 1997). For the most up to date survey on criminal law and economics see (A. M. Polinsky and S. Shavell 2007). For the most up to date survey on empirical criminal law and economics see (Levitt and Miles 2007). See also chapters 20 to 25 of (Shavell 2004).
For some more recent contributions see the following. (Cooter and Rubinfeld 1989) provides an overview of the economics of legal conflict resolution; although it looks primarily at private litigation. (Garoupa 1997) offers a more technical survey of the economic model of law enforcement. (Kessler and Levitt 1999 ) examine econometric strategies to distinguish deterrence effects from incapacitation since aggregate date is usually problematic in that respect. (Lewin and Trumbull 1990) discuss the economic assumption that crime generates costs and benefits; in particular, it addresses the possibility that crime has a positive social value. (Miceli 1991) introduces fairness considerations into the economic model of law enforcement. (Polinsky and Shavell 2000) survey the economic model of public law enforcement. (Shavell 1987) proposes an economic theory of criminal incapacitation as an alternative to deterrence. (Shavell 1991) distinguishes general enforcement from crime-specific enforcement, looking at complementarities and substitution effects. (Shavell 1993) provides a general framework to understand law enforcement, including criminal law and tort law. And finally (Bouckaert and Geest 1992) offer a bibliography of law and economics.
