Robbery, Economic Incentives and Deterrence: An Intercountry Analysis for 1997

Susan Navarro
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Susan Navarro: School of Economics, University of the Philippines Diliman

No 200410, UP School of Economics Discussion Papers from University of the Philippines School of Economics

Abstract: Causes of crime were sought in individual's characteristics, sociological aspects and illicit drug use. Since the pioneering work of Gary Becker (1968), economists have analyzed determinants of crime from the perspective of the offender's rational decision to participate in illegal activities. Cross section data for 1997 were used in this paper to examine intercountry differences in effects of economic incentives and deterrence on robbery rates at national levels. Significant negative effects of the total convicted for robbery/total prosecuted for robbery, a proxy for the prabability of being apprehended and punished due to this crime, were found. The finding of an inducing impact of income inequality is consistent with that of Fajnzylber, Lederman, and Loayza, (2000) who analyzed social and economic determinants of robbery and homicide rates (at national levels) in a sample of about 45 countries for homicide and 34 countries for robbery. They used a generalized method of moments (GMM) estimator applied to dynamic models of panel data covering the period 1970-1994. These results are in accordance with Erlich's theory that an increase in the probability of being apprehended and punished has a deterrent effect on offenders and that offenders, as a group, respond to incentives in much the same way that those who engage in strictly legitimate activities do as a group. The decision to participate in crimes involving material gains as an occupational choice is deemed consistent with evidence of positive association between income inequality and the rate of crimes against property.

Pages: 27 pages
Date: 2004-08
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Published as UPSE Discussion Paper No. 2004-10, August 2004

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