Academic journal article NBER Reporter

The Economics of Crime and the Criminal Justice System

Academic journal article NBER Reporter

The Economics of Crime and the Criminal Justice System

Article excerpt

My recent empirical research focuses on crime and the criminal justice system. Within this broad area, three primary themes emerge: identifying the causal link between criminal justice policies and crime rates; differentiating empirically between deterrence and incapacitation; and using nonstandard data sources to test economic theories. This synopsis of my research is organized around these themes.

Identifying the Causal Link Between Criminal Justice Policies and Crime Rates

Differentiating between correlation and causality is critical when analyzing the impact of crime policies. For instance, Newark has a violent crime rate four times higher than that of Omaha, and it also has twice as many police per capita. A likely explanation for this relationship, however, is that high crime rates lead cities to hire more police, not that police cause crime. Similarly, when crime is rising, prison populations also tend to rise. This is not surprising: if criminals continue to be caught and punished at a constant rate, then the prison population should mechanically rise one-for-one with the crime rate. From the perspective of ideal public policy, reliance on such correlations provides no guidance. Identifying the causal link between increases in police and the number of prisoners and crime is necessary.

I have examined the impact of police on crime, using the timing of mayoral and gubernatorial elections as "instruments" for changes in the police force.(1) Indeed, the size of the police force appears to be affected by election timing. Over a 25-year period, the average increase in the size of the police force in large U.S. cities in mayoral election years was 2 percent; in gubernatorial election years it was 2.1 percent, and in nonelection years there was no change. It appears that incumbent politicians attempt to bolster their re-election prospects by appearing "tough on crime." If elections do not otherwise affect crime rates (after controlling for other factors that may be influenced by elections, such as changes in the local economy), then electoral cycles may plausibly influence changes in the police force. In one set of estimates, I find a positive relationship between police and crime. But when I include elections in the analysis the sign reverses, and police appear to significantly reduce crime.

In a related paper, I consider the relationship between the number of prisoners and crime rates.2 In this paper, I use prison overcrowding lawsuits as an indicator of change in prison populations. These lawsuits affect prison populations, but they may be otherwise unrelated to crime rates (especially because the cases often take a decade or more to be resolved). In 13 states, lawsuits brought by the American Civil Liberties Union have affected a state's entire prison system. In the three years after a final decision was handed down by the courts in those cases, prison populations fell by 14.3 percent compared to the population of the nation as a whole, whereas violent and property crime rates increased 10.2 percent and 5.5 percent respectively. Using my estimate of the elasticity of crime with respect to the prison population and previous estimates of the costs of crime from Miller, Cohen, and Rossman, I cannot reject the possibility that the marginal social cost of imprisonment equals the marginal social benefit of the reduction in crime.(3)

Deterrence, Incapacitation, and the Response of Criminals to Incentives

Becker's well-known economic model of crime is based on deterrence: potential criminals alter their behavior in response to changing incentives.(4) Empirically, however, it is often difficult to distinguish between deterrence (which is a behavioral response) and incapacitation (in which reductions in crime are attributable solely to criminals being unable to commit crimes because they are locked up). Virtually all of the empirical work that purportedly supports the economic model of crime is equally consistent with incapacitation. …

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