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Crime and punishment with habit formation

Vladimir Teles () and Joaquim Pinto de Andrade

No 199, Textos para discussão from FGV EESP - Escola de Economia de São Paulo, Fundação Getulio Vargas (Brazil)

Abstract: Moral concepts affect crime supply. This idea is modelled assuming that illegal activities is habit forming. We introduce habits in a intertemporal general equilibrium framework to illegal activities and compare its outcomes with a model without habit formation. The findings are that habit and crime presents a non linear relationship that hinges upon the level of capital and habit formation. It is possible to show that while the effect of habit on crime is negative for low levels o habit formation it becomes positive as habits goes up. Secondly habit reduces the marginal effect of illegal activities return on crime. Finally, the effect of habit on crime depends positively on the amount of capital. This could explain the relationship between size of cities and illegal activity.

Date: 2009-09-03
New Economics Papers: this item is included in nep-law
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Related works:
Working Paper: CRIME AND PUNISHMENT WITH HABIT FORMATION (2005) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:fgv:eesptd:199

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