The social value of crime?

Abstract

criminal gains in welfare economics and cost-benefit analysis. It has been common practice among economists working in this area to make use of social welfare functions containing the gains from criminal activity as a positive value. The inclusion of criminal gains is an ethical judgment, but economists often fail to acknowledge it as such, or even seem to be aware that it is controversial. There has been considerable interest in the economics of crime and optimal law enforcement since Gary Becker’s well-known article of two decades ago.’ In deriving an equation for the optimal level of law enforcement, Becker employed a social loss function in which the total loss to society equals the harm done by the crime plus the cost of law enforcement, but minus the “social value of the gain to offenders.“‘Becker thus treated a reduction in criminal gains as a cost of law enforcement.’ In a response to Becker, George Stigler questioned the assumption that the gain to offenders has a positive social value: The determination of this social value is not explained, and one is entitled to doubt its usefulness as an explanatory concept: what evidence is there that society sets a positive value upon the utility derived from a murder, rape, or arson? In fact, the society has branded the utility derived from such activities as illicit.4