Deterrence and Avoidance

Abstract

This paper explores the effects of public enforcement, in general, and punishment, in particular, on crime levels if offenders can engage in avoidance activities. Avoidance reduces the probability or magnitude of punishment. In general, offenders can reduce their expected punishment either by substituting legal for criminal activities (the deterrent effect) or by increasing avoidance activities. This paper shows that increasing the direct costs of crime - by either increasing punishment or enforcement efforts - does not necessarily deter criminal activity and may actually trigger increased crime, if avoidance is possible. Furthermore, this paper shows that increasing the opportunity costs of crime (e.g., by subsidizing legal alternatives or through education or vocational programs) reduces both crime and avoidance and in this respect is advantageous. The conditions for such outcomes are identified, the economic mechanisms explained, and an underlying intuitive approach for these results proposed.