Crime can be a Giffen Good: The Role of Need in Criminal Labor Supply

W. Bentley Macleod

No 31786, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Building upon the Becker (1968)-Ehrlich (1973) model of crime, this paper shows that under the appropriate conditions crime is a Giffen good: increasing deterrence can lead to an increase in crime. This result relies upon two conditions. The first is that individuals are choosing between how much time to allocate between leisure and crime as an income earning activity. Second, in the absence of income from criminal activity, individuals do not have access to sufficient resources to fund necessary consumption. Evidence consistent with this hypothesis is discussed. This in turn may provide an additional reason why crime reduction is so challenging. The optimal policy is derived, and it is shown that it entails a combination of redistribution and an appropriately set level of deterrence that varies with the level of social inequality.

JEL-codes: J20 K14 K40 (search for similar items in EconPapers)
Date: 2023-10
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