Socially Optimal Crime and Punishment

Arbeitspapier

This paper develops a dynamic life-cycle equilibrium model of crime with hetero-geneous agents and human capital accumulation. Agents decide at each point in time whether to commit crimes by comparing potential gains from crime to the expected cost of punishment (determined from the probability of apprehension, the utility cost of incarceration, and reduced future wages in the legal labor market). Public security policies are defined as pairs of a size of the police force and an average length of sentences. We propose an original micro-founded police production function linking the level of police expenditures to the probability of apprehension. The structural model, estimated using 2000s US data and causal parameters from the empirical literature, allows us to evaluate the global optimality of policies in a way that would not be possible with reduced form estimates or traditional partial equilibrium, static models of crime. Equilibrium effects can be particularly relevant when studying crime, given the interactions across individuals' decisions and policies. We also extend the model to include investments in schooling and explore the potential complementarities across public security and educational policies.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 15053

Classification and Topics

• Classification: Wirtschaft ; Illegal Behavior and the Enforcement of Law ; Welfare, Well-Being, and Poverty: Government Programs; Provision and Effects of Welfare Programs
• Subject: crime ; welfare ; police ; sentence length ; socially optimal policy

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Ferraz, Eduardo ; Soares, Rodrigo R.
• Event: Veröffentlichung
• (who): Institute of Labor Economics (IZA)
• (where): Bonn
• (when): 2022

Further information

• Handle: http://hdl.handle.net/10419/252177
• Last update: 10.03.2025, 11:44 AM CET