Economic Analysis of the Criminal Justice System

Abstract

Economic analysis of problems of the criminal justice system following the model developed by Gary Becker is based on assumptions about what motivates criminal activity. According to this model, criminals are motivated by the expected net gain from the use of available resources in criminal activity compared with the expected net gain from the use of the same resources in legitimate activity. When the expected gain from crime is higher than the gain from legitimate activity, individuals can be expected to engage in criminal activity. Based on this assumption, policies may be adopted which increase the cost of crime to those who engage in it, reducing the expected net gain and therefore the amount of crime engaged in. Because increasing the cost of criminal activity to criminals may be very costly, the total loss to a community from crime will have to include not only the direct costs of crime but the indirect costs associated with the suppression of crime. It is assumed that policy will be designed to minimize the total loss from crime. Two possible standards are proposed, "efficiency" and a Pareto test. While most of those who adopt this model concentrate on the deterrent effect of pu nish ment, raising the cost of engaging in crime, other less punitive policies for increasing legitimate opportunities and equalizing the distribution of wealth are equally consistent with the assumptions of this model.