Crime and Economics Chapter 8 (Pages ) Dan Hunter

Types of Crime Property Crime – Crimes that include theft, burglary, and motor vehicle theft. Violent Crime – Crimes that include murder, rape, and simple and aggravated assault.

Figure 8.1 (page 199)

Public Goods Public Good – A good that is nonexcludable and nonrival. 1.Nonexcludable Good – A good that is impossible or extremely difficult to exclude nonpayers from consuming. 2. Nonrival Good – A good that one person can consume without reducing the amount available for others to consume.

Public Goods The government may be able to provide a public good more effectively than the private sector for at least three reasons. 1.It is costly to exclude people from the benefits of a public good. 2.Monitoring the use of public goods may create private costs. 3. Private provision of a public good, like security or national defense, may be economically inefficient.

Analyzing Crime Economists are willing to assume that criminals, just like law-abiding citizens, are systematic evaluators of the feasible choices before them. Economists also assume people are willing to substitute among goods. Economists also think of people as creative and resourceful. The implication is that, given a large enough compensation, many people will take actions that they ordinarily would not choose to take.

Why Do People Commit Crimes? An individual commits a crime when the expected marginal benefit of the crime is greater than the expected marginal cost. The marginal benefit is the material or psychological reward coming from the crime. The marginal cost is the material or psychological cost of the decision.

Dealing with Crime Imprisonment decreases crime because… 1. Offenders tend to repeat their criminal activity, and they will not be able to while they are locked up. 2. An imprisoned criminal is not immediately replaced by a new offender. 3. Imprisonment does not increase after-prison criminal activity. 4. It raises the cost of committing a crime.

Dealing with Crime “Better” people – Improving the economic and social environment for children is a long-term strategy for crime control. A well-educated person with good job skills faces a higher cost of crime than does a person with poor job skills. People in an economy with good employment opportunities face higher costs of crime.

Free Riders A free rider is a person who uses goods or services provided by others without paying for them. People have a tendency to be free riders. Because people tend to be free riders, the government taxes everyone in order to provide the service as a public good.

An economic approach to crime control implies that government can control crime, particularly property crime, because it can create conditions in which crime does not pay. The Economic Approach

If Crime Can Be Controlled, Then Why Does It Still Exist? The feeling of security increases as the probability of being a crime victim decreases from 63 to 62 percent for a particular time period. The feeling of security also increases as that probability decreases from 3 percent to 2 percent. Most people would not value the second decreases as much as they value for the first decrease.

Cost of Reducing Crime To reduce crime, more resources must be devoted to crime control. It takes more resources to reduce crime by a given amount if the crime rate is already low than to reduce it by the same amount if the crime rate is high. As the amount of crime falls, reducing it further eventually requires an assault on our freedom.