Economic Model Of Crime Research Articles

Punishing White-Collar Crime in Canada: Issues With the Economic Model of Crime and Punishment

White-collar crime differs from other types of crime in both how the public perceives it and the socio-economic standing of the typical perpetrators. Nevertheless, white-collar crime has significant negative social and economic effects. In formulating deterrents against white-collar crimes, economic models using cost-benefit analyses that fix relative values to fines and incarceration have been influential. However, these economic models are not in keeping with judicial sentencing in Canada and do not accurately reflect current criticisms about the social inequalities associated with fines and incarceration. Economic models contend that large fines reinforced by possible incarceration are the best sentencing deterrent for white-collar crimes in Canada. Yet, as this article argues, a better approach is preventing white-collar crimes through government regulation and corporate structures that eliminate opportunities for criminal conduct.

The role of social capital in the victimization risk against property: evidence from Brazil*

Abstract The economic model of crime presupposes that individuals evaluate the decision to commit a crime rationally. A more inclusive version of this model would include social capital as a factor influencing criminal activity. The amount of social capital that exists within a group can be used to explain criminal behavior, and an increase in the level of social capital can be a factor capable of preventing crime. This study tests the hypothesis that increasing the level of social capital reduces the risk of victimization against property. Results from variations of an IV-Probit model were used to evaluate data from Latin American Public Opinion Project surveys conducted in Brazil. These results suggest that a higher level of social capital among individuals increases the likelihood that they will cooperate for mutual benefit, such as combating crime.

More Sneezing, Less Crime? Seasonal Allergies, Transitory Costs and the Market for Offenses

The neoclassical economic model of crime envisions crime as a gamble undertaken by a rational individual who is weighing the costs and benefits of offending at the margin. A large literature estimates the sensitivity of crime to policy inputs that shift the cost of offending such as police and prisons. In this paper, we point out that participants in the market for offenses also respond to transitory changes in situational factors and that these are in constant flux. We consider the responsiveness of crime to a pervasive and common health shock which we argue shifts costs and benefits for offenders and victims: seasonal allergies. Leveraging daily variation in city-specific pollen counts, we present novel evidence that violent crime declines in U.S. cities on days in which the local pollen count is unusually high and that these effects are driven by residential violence. While past literature suggests that property crimes have more instrumental motives, require planning, and hence are particularly sensitive to permanent changes in the cost and benefits of crime, we find evidence that violence may be especially sensitive to situational factors.

A Note on the Application of Dynamic Panel Data (DPD) Models in Economic Models of Crime

Abstract The dynamic panel data (DPD) model and application of Difference and System GMM estimators has great advantages to address endogeneity of law enforcement variables and measurement error in reporting of crimes in economic models of crime as well as controlling for fixed effects and avoiding dynamic panel bias. Meanwhile, neglecting instrument proliferation which is very common and uncommonly detected in these models can lead to misleading and unreliable results. Bolding this warning and presenting available techniques to control for this potential danger is the main mission of this note.

Criminals and the Price System: Evidence from Czech Metal Thieves

This paper tests the economic theory of criminal behavior. Specifically, it looks at “the carrot” side of the theory, studying how thieves react to changes in monetary gains from crime. Using a unique crime-level dataset on metal theft in the Czech Republic, we study thieves’ behavior in a simple regression framework. We argue that variation in metal prices represents a quasi-experimental variation in gains from crime. It is because (1) people steal copper and other nonferrous metals only to sell them to scrapyard and (2) prices at scrapyards are set by the world market. This facilitates causal interpretation of our regression estimates. We find that a 1% increase (decrease) in the re-sale price causes metal thefts to increase (decrease) by 1–1.5%. We show that the relationship between prices and thefts is very robust. Moreover, we find that thieves’ responses to price shocks are rapid and consistent. Our results are in line with the economic model of crime, wherein criminal behavior is modeled as a rational agent’s decision driven by the costs and benefits of undertaking criminal activities. Our estimates are also consistent with recent results from the United Kingdom, suggesting these patterns are more general.

A Radical Economic Model of Crime with an Empirical Test in Non-city Zip Codes

This article addresses three main issues. First, the structural explanation of crime rates across zip codes within a US county outside of that county’s major city’s limits. Second, this article addresses whether the traditional social disorganization argument which links measures of disorganized neighborhoods and in particularly deficiencies in informal social control to race, income inequality and poverty provides an adequate explanation of variations in non-city zip code crime rates. Third, this article also examines a radical critique of the kind of structural model posed by social disorganization, and tests an alternative radical economic model of crime at the zip code level. The empirical evidence illustrates the weakness of social disorganization explanations of crime at the zip code level. In contrast to those results, the empirical results for the proposed radical economic model of crime support its use for explaining crime across county zip codes. This type of empirical evidence demonstrates that radical models of crime have utility in explaining how economic structures influence the distribution of crime independently of variable identified in orthodox criminology.

Nonparametric multiple expectile regression via ER-Boost

Expectile regression [Newey W, Powell J. Asymmetric least squares estimation and testing, Econometrica. 1987;55:819–847] is a nice tool for estimating the conditional expectiles of a response variable given a set of covariates. Expectile regression at 50% level is the classical conditional mean regression. In many real applications having multiple expectiles at different levels provides a more complete picture of the conditional distribution of the response variable. Multiple linear expectile regression model has been well studied [Newey W, Powell J. Asymmetric least squares estimation and testing, Econometrica. 1987;55:819–847; Efron B. Regression percentiles using asymmetric squared error loss, Stat Sin. 1991;1(93):125.], but it can be too restrictive for many real applications. In this paper, we derive a regression tree-based gradient boosting estimator for nonparametric multiple expectile regression. The new estimator, referred to as ER-Boost, is implemented in an R package erboost publicly available at http://cran.r-project.org/web/packages/erboost/index.html. We use two homoscedastic/heteroscedastic random-function-generator models in simulation to show the high predictive accuracy of ER-Boost. As an application, we apply ER-Boost to analyse North Carolina County crime data. From the nonparametric expectile regression analysis of this dataset, we draw several interesting conclusions that are consistent with the previous study using the economic model of crime. This real data example also provides a good demonstration of some nice features of ER-Boost, such as its ability to handle different types of covariates and its model interpretation tools.

Rainfall Shocks and Property Crimes in Agrarian Societies: Evidence from India

We examine the effects of rainfall shocks on various the incidence of crime in India from the years 1971-2000. We find that the incidence of most crimes increases with negative rainfall shocks. Positive rainfall shocks, in contrast, lead to increases in property crimes, but have no effect on non-property crimes. These findings are consistent with economic models of crime emphasizing both opportunity costs and returns.

The effects of curfews on juvenile criminal activity: an individual-level analysis

The purpose of this study is to determine the impact of juvenile curfews on the criminal activities of young adults. Using individual-level data from the National Longitudinal Survey of Youth – Geocode (NLSY) data set and estimating an economic model of crime for young adults, this study finds that although curfews have no statistically significant effect on the criminal behaviour of young adults, they do have a negative effect on the arrests of young adults. These results differ somewhat from the results of prior studies but lend support to community officials who believe that curfews are an effective tool in combating juvenile crime.

Immigration, Integration and Terrorism: Is There a Clash of Cultures?

We test whether immigrants are more prone to support terror than natives because of lower opportunity costs, using the international World Values Survey data. We show that, in general, economically, politically and socially non-integrated persons are more likely to accept using violence for achieving political goals, consistent with the economic model of crime. We also find evidence for the destructive effects of a ‘clash of cultures’: Immigrants in OECD countries who originate from more culturally distanced countries in Africa and Asia appear more likely to view using violence for political goals as justified. Most importantly, we find no evidence that the clash-of-cultures effect is driven by Islam religion, which appears irrelevant to terror support. As robustness test we relate individual attitude to real-life behavior: using country panels of transnational terrorist attacks in OECD countries, we show that the population attitudes towards violence and terror determine the occurrence of terror incidents, as does the share of immigrants in the population. A further analysis shows a positive association of immigrants from Africa and Asia with transnational terror, while the majority religion Islam of the sending country does not appear to play a role. Again, we find that culture defined by geographic proximity dominates culture defined by religion.

Restorative Justice for Banks Through Negative Licensing

The most general lesson of the crime prevention literature is taken to be that repeat victimization and repeat offending are concentrated in time and space; early intervention to prevent wider infl ammation of such hot spots is more effective than reactive general deterrence (as in economic models of crime). That prescription is applied to how the 2008 fi nancial crisis might have been prevented and how the crimes of Enron and Arthur Andersen might have been tackled to ameliorate the 2001 crisis. Negative licensing based on walking the beat and kicking the tyres at fi nancial hot spots, with reduced reliance on economic models of risk, is one remedy advocated. Then, the threat of negative licensing might be used to motivate restorative justice that transforms the ethical culture, particularly the bonus culture, of banks. Keywords: global fi nancial crisis, regulation ,

Restorative Justice for Banks Through Negative Licensing

The most general lesson of the crime prevention literature is taken to be that repeat victimization and repeat offending are concentrated in time and space; early intervention to prevent wider inflammation of such hot spots is more effective than reactive general deterrence (as in economic models of crime). That prescription is applied to how the 2008 financial crisis might have been prevented and how the crimes of Enron and Arthur Andersen might have been tackled to ameliorate the 2001 crisis. Negative licensing based on walking the beat and kicking the tyres at financial hot spots, with reduced reliance on economic models of risk, is one remedy advocated. Then the threat of negative licensing might be used to motivate restorative justice that transforms the ethical culture, particularly the bonus culture, of banks.

Testing the fixed effects restrictions? A Monte Carlo study of Chamberlain’s Minimum Chi-Squared test

Chamberlain [Chamberlain, G., 1982. Multivariate regression models for panel data. Journal of Econometrics 18, 5–46] showed that the fixed effects (FE) specification imposes testable restrictions on the coefficients from regressions of all leads and lags of dependent variables on all leads and lags of independent variables. Angrist and Newey [Angrist, J.D., Newey, W.K., 1991. Over-identification tests in earnings functions with fixed effects, Journal of Business & Economic Statistics 9, 317–323] suggested computing this test statistic as the degrees of freedom times the R 2 from a regression of within residuals on all leads and lags of the exogenous variables. Despite the simplicity of these tests, they are not commonly used in practice. Instead, a Hausman [Hausman, J.A., 1978. Specification tests in econometrics, Econometrica 46, 1251–1271] test is used based on a contrast of the fixed and random effects specifications. We advocate the use of Chamberlain test if the researcher wants to settle on the FE specification and we check this test’s performance using Monte Carlo experiments and we apply it to the crime example of Cornwell and Trumbull [Cornwell, C., Trumbull, W.N., 1994. Estimating and economic model of crime with panel data. Review of Economics and Statistics 76, 360–366].

Economic Models of Crime and Punishment

OVER THE LAST 45 YEARS, THREE MONUMENTAL STORIES HAVE dominated the national American crime scene.* The first was the run up in crime in the 1960s as a number of social forces converged into a perfect storm of increased criminal activity. These forces included the coming of age of the baby boomers and the accompanying and interrelated stresses of the massive baby boom cohort entering its highcrime years at a time of rebellion and strife over racial injustice and the Vietnam War. Moreover, the youth counterculture fueled a growing black market for illegal drugs, and an ideology of permissiveness likely encouraged greater lawlessness and restrained effective criminal justice responses to the burgeoning crime rates. In 1968, the famed psychiatrist Karl Menninger wrote in his book The Crime of Punishment that I suspect that all the crimes committed by all the jailed criminals do not equal in total social damage that of the crimes committed against them. A Time magazine review of Menniger's book captures a dominant strain of thought at that time:

The Impact of Marijuana Law Enforcement in an Economic Model of Crime

U.S. law enforcement against the sale and possession of marijuana has been estimated to cost close to $8 billion a year in criminal justice resources. Current enforcement is justified if it provides net benefits greater than alternatives such as a legal, regulated market for marijuana. Prior research suggests that current levels of drug enforcement may increase nondrug crime and hard drug use. Here, local rates of property crime, homicide, and nonmarijuana drug possession are estimated as a function of economic conditions, enforcement effectiveness, and arrests for possession or sale of marijuana. The data consists of a pooled sample of over 1300 U.S. counties (1994–2001). The results suggest that marijuana arrests are associated with increases in homicides, burglaries, motor vehicle thefts, and larcenies along with subsequent increases in hard drug arrests. These results raise significant questions about the merits of policies that focus on criminal justice approaches to marijuana control.

The Effects of the Standard for Search Warrants

We analyze the effects of the evidence standard for search warrants in an economic model of crime and search. If the warrant standard is initially below a certain positive threshold, increasing it actually reduces crime as well as searches. Moreover, the positive threshold is higher if searches are more preventive. If the warrant standard is initially high enough, increasing it tends to increase crime and reduce wrongful searches. However, if the police do not care too much about whether or not they search the innocent, increasing the standard also increases effort by the police to gather initial evidence non-invasively before seeking to perform invasive searches. Thus, increasing the standard might not greatly increase crime because greater police effort tends to reduce crime; but it might significantly reduce wrongful searches because greater police effort directly increases the accuracy of the police's initial evidence. The results provide efficiency arguments for a right against unreasonable searches.

A law and economics perspective on terrorism

This paper reviews the existing law and economics literature on crime, noting where various models might apply to the terror context. Specifically, it focuses on two strands of the literature, deterrence and incapacitation. It considers anti-terror measures enacted by different countries, highlighting how the details of the laws correspond to the insights from economic models of crime. In conclusion, the paper proposes an efficient sorting mechanism in which individuals will be provided with incentives to reveal their type to law enforcement authorities.

Credible Criminal Enforcement

Economic models of crime and punishment implicitly assume that the government can credibly commit to the fines, sentences, and apprehension rates it has chosen. We study the government’s problem when credibility is an issue. We find that several of the standard predictions of the economic model are altered when commitment is taken into account. Specifically, when only fines are used, commitment results in a lower apprehension rate and hence a higher crime rate. However, when jail is used (with or without fines), apprehension rates and jail terms may be higher or lower compared to the optimal static policy.

Cultures of Illegality in the National Hockey League

1. IntroductionThe economic model of crime demonstrates how an individual might decide to engage in illegal activity. It demonstrates that such activity may be motivated by incentives associated with a person's human capital skills, the availability of legitimate activity, preferences for risk, the potential sanction, and the probability of detection. But individualized as it may be, illegal activity still takes place in a social context. Fundamentally, a person who commits a crime has violated laws or other institutions formed by the larger social group. By the same token, society's collective experiences, fears, expectations, and reactions in relation to crime may well influence the individual decision to commit crime. Given crime's social content, can we disentangle the influence of social environment, or culture, from the individual factors that determine crime?1 This article addresses this question.In the economic model of crime, hypothetical agents consider the various benefits and costs of legal and illegal activity and then decide how much time to devote to either activity. A more criminalized culture of illegality might enhance the potential benefit of crime through tacit or overt encouragement of crime and might reduce the potential cost of crime by relieving some of the stigma (social cost) associated with it.2 If individuals experience a more pronounced culture of illegality, they might engage in more illegal activity on that basis; in principle, if we could remove them from that culture, they would less likely engage in illegal activity. But many factors complicate this possibility.Over time and over space, societal crime rates appear to vary in the opposite direction as overall wealth, whether measured in terms of legal wage opportunities or income level.3 Therefore, any hypothetical change in a person's culture of illegality would almost certainly imply a change in his wealth or his opportunity to engage in legal time allocation. Furthermore, an individual who experiences a cultural change carries along a set of personal characteristics (e.g., tastes for illegality or for risk) that likely do not vary across cultures. Testing empirically for the influence of culture on individual-level crime thus requires a sample of individuals who engage in both legal and illegal activity, data on their personal incentives to engage in legal and illegal behavior (including their wealth), data on their cultures of illegality, and some exogenous cultural change that affects some subset of them. The data used in this study, relating to players in the National Hockey League (NHL), possess each of these features.As illustrated by Allen (2002), the NHL provides a useful setting for analyzing the economic model of crime, especially when one follows the legal and illegal behavior of a sample of players over a period of time, in a panel setting. Like citizens in society, hockey players react to a number of factors interpretable as benefits or costs associated with committing illegal activity (on-ice rules violations, which result in penalties). For example, a player's own history of involvement in illegality, such as measured by his career penalty minutes, likely indicates the manner by which he generally achieves success in the sport, while deficiencies in his current team at penalty killing (defending against goals while shorthanded) likely act as costs and, hence, as deterrents.Because hockey players have team-based objectives, their behavior may be influenced by the values and expectations of a larger social group (the team, the league, fans) with respect to physically aggressive play. In ice hockey, the culture of illegality may even have a situational character: In a given game, the degree to which one player's illegality is accepted may emanate in part from the level of illegality or violence demonstrated by the opposing team in that game. Also, because some players get traded from one team to another during the course of a season, we can observe economic agents who experience exogenous change in the culture of illegality around them. …

Cultures of Illegality in the National Hockey League

When people commit illegal acts, are they influenced by the wider culture of illegality around them, or do personal incentives matter most? If someone experiences a more pronounced culture of illegality, whether he increases his illegality depends greatly on his historical involvement with illegality and how his wealth also changes. The National Hockey League provides a useful setting for empirical analysis of these issues. Using a constructed panel data set, which tracks player behavior on a game‐by‐game basis over the course of a season, we examine how various aspects of the wider culture of illegality affect individual illegality. We also take advantage of what amounts to a natural experiment in exogenous cultural change, by examining the behavior of players traded during the season under analysis. The empirical results are consistent with the economic model of crime, but cultural factors generally appear less influential and robust than individual‐level incentives.