CERTAINTY VS. SEVERITY OF PUNISHMENT
Recent research has generated conflicting findings regarding the role of employment and earnings versus criminal justice sanctions in reducing crime. Further disagreement exists over the relative effectiveness of increased certainty versus increased severity of punishment as deterrents to crime. This paper uses a large data set containing criminal and labor market histories of a broad sample of young male arrestees to estimate an economic model of crime. Deterrence, incapacitation, and criminal human capital effects are measured, and the effects of employment and earnings on criminal activity are estimated. The results largely reconcile the conflicting findings from previous research.
In recent research, analyses of individual-level data have led to conflicting conclusions concerning the economic model of crime. Two points of contention have arisen: first, whether increases in the severity of punishment exert a stronger deterrent effect than comparable increases in the certainty of punishment, and second, whether stronger criminal justice sanctions or better labor market performance more effectively reduces crime. Ann Witte  concluded from her analysis of North Carolina prison releasees that certainty of punishment carried a greater deterrent effect than punishment severity, and that better labor market rewards had relatively little effect on criminal activity. In contrast, Samuel Myers's  analysis of the post-release experience of exprisoners in federal and Maryland institutions led him to conclude that improved labor market measures led to lower levels of criminal activity than increased criminal sanctions. Further, while his results indicated that a decrease in crime was associated with increasing severity of the most recent sanction, he found an apparently perverse positive effect associated with increasing punishment certainty.
One is tempted to speculate that these results stem in some way from the characteristics of the released prisoners, who on average had extensive criminal histories prior to the observation period. Individuals with extensive prior imprisonment may simply be unable to find any but the most menial jobs, leading them to prefer criminal activities in spite of apparently high risks of punishment. Further, the use of such specialized samples of individuals brings into question the extent to which even corroborating findings could be generalized to inform policy.
Phillips and Votey  have recently analyzed the effect of income and police contact measures on the proportion of income derived from illegitimate means. They look at a broader population, examining data from respondents to the 1980 wave of the National Longitudinal Survey Youth Cohort who admitted some contacts with police. While their results indicated that both police contacts and higher earnings were negatively associated with their outcome measure, the significance of their findings was sensitive to the exclusion of the roughly 15 percent of their sample members who reported the greatest number of police contacts.
Taken as a whole, these mixed results are troubling and offer little guidance as to the optimal mix of criminal justice and labor market measures to be used in reducing crime. In this paper, a variant of the economic model of crime is estimated from a sample of male arrestees in California. Their criminal records range from a single misdemeanor arrest to repeated felony convictions and imprisonments.(1)
The size of the sample and detailed information contained in the data allow one to examine a broader set of questions than previous authors could. In addition to measuring responses to increased certainty and severity of punishment, I estimate the incapacitative effect of prison, that is, of the amount of crime prevented during the time that the offender is isolated from society. Furthermore, I find evidence of a criminal human capital effect, a finding which has serious implications about the optimal mix of certainty versus severity of punishment as strategies to deter crime. …