Abstract
Despite an abundance of empirical evidence on crime spanning over 40 years, there exists no consensus on the impact of the criminal justice system on crime activity. We construct a new panel data set that contains all relevant variables prescribed by economic theory. Our identification strategy allows for a feedback relationship between crime and deterrence variables, and it controls for omitted variables and measurement error. We deviate from the majority of the literature in that we specify a dynamic model, which captures the essential feature of habit formation and persistence in aggregate behaviour. Our results show that the criminal justice system exerts a large influence on crime activity. Increasing the risk of apprehension and conviction is more influential in reducing crime than raising the expected severity of punishment.
Highlights
Crime, originating from the root of Latin cerno (‘I decide, I give judgment’), is the behaviour judged by the State to be in violation of the prevailing norms that underpin the moral code of society
We estimate an econometric model for crime using a new panel data set containing information on illegal activity and deterrence variables for local government areas in New South Wales, Australia
Our findings suggest that the criminal justice system can potentially exert a large impact on crime
Summary
Crime, originating from the root of Latin cerno (‘I decide, I give judgment’), is the behaviour judged by the State to be in violation of the prevailing norms that underpin the moral code of society. In order to address these questions in a constructive way, it is important to recognize that changes in the aggregate crime rate stem from individual behaviour Policies such as increased sentence lengths may lower the crime rate through two possible channels: deterrence and incapacitation. The results of our analysis show that criminal activity is highly responsive to the prospect of arrest and conviction, but much less responsive to the prospect or severity of imprisonment, if at all This provides support to the idea that the consequences of being arrested and found guilty of a criminal offence include indirect sanctions imposed by society and not just the punishment meted out by the criminal justice system.
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