Positive Sanctions versus Imprisonment

Abstract

This article considers the possibility of simultaneously reducing crime, prison sentences, and the tax burden of financing the criminal justice system by introducing positive sanctions, which are benefits conferred to non-convicts. Specifically, it proposes a procedure wherein a part of the imprisonment budget is re-directed towards financing positive sanctions. The feasibility of this procedure depends on how effectively the marginal imprisonment sentence reduces crime, the crime rate, the effectiveness of positive sanctions, and how accurately the government can direct positive sanctions towards individuals who are most responsive to such policies. A subsequent welfare analysis reveals an advantage of positive sanctions: they operate by transferring or creating wealth, whereas imprisonment destroys wealth. Thus, the conditions under which positive sanctions are optimal are broader than those under which they can be used to jointly reduce crime, sentences, and taxes. With an exogenous [resp. endogenous] budget for law enforcement, it is optimal to use positive sanctions when the imprisonment elasticity of deterrence is small [resp. the marginal cost of public funds is not high]. These conditions hold, implying that using positive sanctions is optimal, in numerical examples generated by using estimates for key values from the empirical literature.