Socially Optimal Crime and Punishment

Eduardo Ferraz Castelo Branco Ferreira and Rodrigo Soares

No 15053, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper develops a dynamic life-cycle equilibrium model of crime with hetero-geneous agents and human capital accumulation. Agents decide at each point in time whether to commit crimes by comparing potential gains from crime to the expected cost of punishment (determined from the probability of apprehension, the utility cost of incarceration, and reduced future wages in the legal labor market). Public security policies are defined as pairs of a size of the police force and an average length of sentences. We propose an original micro-founded police production function linking the level of police expenditures to the probability of apprehension. The structural model, estimated using 2000s US data and causal parameters from the empirical literature, allows us to evaluate the global optimality of policies in a way that would not be possible with reduced form estimates or traditional partial equilibrium, static models of crime. Equilibrium effects can be particularly relevant when studying crime, given the interactions across individuals' decisions and policies. We also extend the model to include investments in schooling and explore the potential complementarities across public security and educational policies.

Keywords: crime; welfare; police; sentence length; socially optimal policy (search for similar items in EconPapers)
JEL-codes: I38 K42 (search for similar items in EconPapers)
Pages: 72 pages
Date: 2022-01
New Economics Papers: this item is included in nep-dge, nep-lam and nep-law
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://docs.iza.org/dp15053.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp15053

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().