Econ 522 – Lecture 24 (Dec 6 2007)Tuesday, we began with the ways that criminal law differs from civil law. Crimes are perceived as harming the public, not just a single victim; they require intent; they’re prosecuted by the government, not the victim; the standard of proof is higher; and the goal of a punishment is to make the offender worse off, not to make the victim whole.We argued that tort law is insufficient to deal with certain types of offenses: because it relies on perfect compensation (sometimes impossible or impractical), and because since punishment is not certain, deterrence requires punishment more severe than the harm done.Under the assumption of rational criminals, we analyzed the problem of optimal deterrence, considering the costs and benefits of preventing one more crime on the margin.We discussed how part of the punishment for a crime is the social stigma of having been convicted, and how this can be an efficient punishment (negative social cost) when applied to guilty offenders, but an inefficient one (high social cost) when applied to innocent defendants.We discussed a couple of arguments for and against assessing different fines to rich and poor offenders, based on the different penalties required for deterrence. Someone raised the question of fines which are scaled based on a person’s income. In fact, this is sometimes done in Europe. European countries tend to rely more heavily on fines rather than on imprisonment relative to the U.S.; and fines often include a component called a “day-fine”, which the fine is calculated as a certain number of days at your current (or recent) income level. (The fine can also be paid over time, helping to address the problem of “judgment-proof” defendants.)We talked about the benefits of imprisonment as a punishment – incapacitation (the inability to commit more crimes while in jail), and rehabilitation (which was once a hot topic in the U.S. but has gone out of favor).We talked about the notion of “marginal deterrence”, the fact that punishments can push offenders from one type of crime to another. We discussed the fact that the chance of being caught seems to deter more crimes on the margin than an increase in the penalty when convicted, and gave a simple model from Friedman to explain this.Finally, we saw Friedman’s weird dystopian view of what an efficient punishment scheme might look like, and discussed why “efficient” punishments might not be the best idea.“Irrational” criminalsRational criminals should have no regret. They calculated the expected costs and benefitsof an activity, and made a choice based on that analysis; if they get caught and punished, they can be upset that chance did not favor them, but have no reason to regret the choice they made. (If I bet $50 against $100 on a coin flip and lost, I might be sad I lost, but I don’t regret having made the bet.)Cooter and Ulen point out that some crimes are committed by people having a momentary lapse – doing something that afterwards they regret doing. Economics has a hard time modeling people who are completely irrational. But Cooter and Ulen give a simple model of criminals who are “slightly” irrational.With most crimes, the benefit from committing the crime is immediate. The punishment, if it occurs, comes some time in the future. So the cost-benefit analysis of whether to commit a crime looks like this:[ Present benefit ] – [ Expected future punishment ]Cooter and Ulen suppose that the rate at which people discount future events might not be perfectly stable. That is, at certain times, we might discount the future at one rate, andat other times, at another.If the present benefit and expected punishment are both positive, there is some discount factor at which they are equal; that is, there is some cutoff discount rate at which the present benefit of a crime exactly equals the expected future punishment. Everyone with discount rates below this avoid committing this crime; when discount rates are above this,the crime starts to look like a good choice. Cooter and Ulen argue that at some times (say, late on a Saturday night while drunk), people might weigh the present much more heavily than the future, that is, they might discount the future very severely, making the crime look desireable. In the light of the next day, under more normal conditions, they would then regret the tradeoff they had chosen to make.In Chapter 12, Cooter and Ulen offer lots of fun facts about crime in the U.S. In 2005, the U.S. had over 2,000,000 prisoners in jails and prisons, up from half a million in 1980;nearly another 5 million are on probation or parole. 93% are male. Among those in federal prisons, 60% are in for drug-related offenses. The incarceration rate in the U.S. – around 0.7% – is more than 7 times that in Western Europe.- Crime rates in the U.S. (relative to population) decreased steadily from the mid-1930s till the early 1960s- From the early 1960s to the late 1970s, the rate of all crimes increased sharply. - From the early 1980s to the early 1990s, the rate of nonviolent crimes committed by adults dropped sharply; the rate of violent crimes by adults dropped slightly, but the rate of violent crimes by young people went up- From the mid 1990s till now, both violent and nonviolent crimes have been dropping, sharply in the 1990s and more slowly since 2000.(In recent years, nonviolent crime rates have been going up overseas, so that nonviolent crime rates in the U.S. are similar or even below some European countries. Violent crimerates are still significantly higher in the U.S., although well below their peak – from 1991to 2004, the murder rate in the U.S. fell by one-third.)Criminals in the U.S. are disproportionally young males, with crime rates generally following trends in the share of the population between ages 14 and 25. Both violent criminals and their victims are disproportionally African-American.A relatively small number of people commit a large fraction of violent crimes. The book gives a few consistent characteristics of that group, they’re things you’d expect: they come from dysfunctional families, have relatives who are criminals, do poorly in school, are alcohol- and drug-abusers, live in poor and chaotic neighborhoods, and being misbehavior at a young age.Cooter and Ulen try to ballpark the social cost of crime. The easy part to calculate is money spent on crime prevention and
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