Shadow pricing utilitarian justice: some tentative estimates

Abstract

PurposeThe purpose of this paper is to recognise and provide an approach to estimate the value of an institution that produces a public good to the wealth of a nation. Specifically, the authors value utilitarian justice.Design/methodology/approachThe paper employs the classical economic theories of crime and shadow pricing to estimate the total economic value and shadow prices or social productivity of police and higher court deterrence. These measures are estimated using the definitions provided by Dasgupta and by re-engineering key deterrence elasticity estimates gleaned from Australian econometric studies.FindingsThe empirical findings suggest a relatively high social value for police and higher court deterrence. Notwithstanding, addressing socio-economic disadvantage is likely to prevent more subsequent offences than directing more resources to the operation of the criminal justice system.Research limitations/implicationsThe key limitations involve the sensitivity of the estimates to error. Further work is required on all the estimates in the model and in particular the social costs of the serious offences. The next step is to estimate the opportunity cost of supplying police and court deterrence. The cost estimate can then be combined with the estimates of social benefits to estimate a benefit-cost ratio. The model in broad terms demonstrates a way forward to estimating the economic value of and the social productivity of the criminal justice system. The provision of retributive justice is also ignored in this contribution. This requires a separate analysis.Social implicationsThe social implications are that there appears a way to both justify and evaluate the criminal justice system and this methodology may be applied to the operation of other public services.Originality/valueThe originality of this paper lies in suggesting a method to solve the valuation problem for the jointly produced public goods of the higher courts and police.