Crime1

Economics of Crime Victoria Vernon, Ph.D. Empire State College

Examples of economic questions in this course: ,[object Object],[object Object],[object Object],[object Object],[object Object]

Outline for Today ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

What is Economics? ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

How do we make choices? (Economics Philosophy) ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Rational decision example: Go to college? ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Rational decision example: Steel a car? ,[object Object],[object Object],[object Object]

choice Work and no violence Work and brawl in bars expect $ 24,000 /yr Apprehended: $ 22,000 lose 1 month in court and jail 0.1 0.9 Not apprehended $ 24,000 Expected income: 0.1*$22,000 + 0.9*$24,000 = $23,800 Expected cost: $200 Compare benefit and cost. Rational choice: brawl in bars?

What is Crime? Illegal activity. ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Crime? ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

[ Serious violent crimes : rape, robbery, aggravated assault, and homicide Bureau of Justice Statistics, http://ojp.usdoj.gov/bjs/glance/cv2.htm

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How is Crime Measured ,[object Object],[object Object],[object Object],[object Object]

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Public Sector Health Safety Civics Education

Victim’s Income Thief’s Income ,[object Object],[object Object],[object Object]

Victim’s Income Thief’s Income $6,000 $6,000 Income Distribution $12,000 Total or Social Income Line: Thief’s + Victim’s Income $12,000 Income Redistribution $9,000 $3,000 ,[object Object],[object Object],[object Object]

Victim’s Income Thief’s Income $6,000 $6,000 Income Distribution $12,000 Total or Social Income Line: Thief’s + Victim’s Income $12,000 Income Redistribution $9,000 $3,000 $11,000 $1,000 social cost of defense $11,000 ,[object Object]

What is the nature of crime? ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Total Costs of Crime for Society ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Choice Legal work Illegal work Unemployed (fail) Employed (succeed) Apprehended (fail) Not Apprehended (succeed) Example of rational choice: Legal Work or Illegal Work?

Expected legal Income = 0.9*$12,000 = $10,800 Legal Work or Illegal Work? Choice with Uncertain Outcomes Choice Legal work Illegal work Unemployed (fail) Employed (succeed) Apprehended (fail) Not Apprehended (succeed) 0.1 0.9 $0 $12,000/yr 0.2 0.8 $0 $14,000/yr Expected illegal income = 0.8*$14,000 = $11,200

Expected legal Income = 0.95*$12,000 = $11,400 Choice Legal work Illegal work Unemployed (fail) Employed (succeed) Apprehended (fail) Not Apprehended (succeed) 0.1 0.9 $0 $12,000/yr 0.2 0.8 $0 $14,000/yr Expected illegal income = 0.8*$14,000 = $11,200 0.05 0.95 Reduce crime: Maintain a full-employment economy

Expected legal Income = 0.9*$12,000 = $10,800 Choice Legal work Illegal work Unemployed (fail) Employed (succeed) Apprehended (fail) Not Apprehended (succeed) 0.1 0.9 $0 $12,000/yr 0.2 0.8 $0 $14,000/yr Expected illegal income = 0.7*$14,000 = $9,800 0.3 0.7 ,[object Object],[object Object]

Expected legal Income = 0.9*$12,000 = $10,800 Choice Legal work Illegal work Unemployed (fail) Employed (succeed) Apprehended (fail) Not Apprehended (succeed) 0.1 0.9 $0 $12,000/yr 0.2 0.8 -$3,000 (fine) $14,000/yr Expected illegal income = 0.8*$14,000 - 0.2*$3,000 = $10,600 $0 ,[object Object],[object Object]

Summary ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Crime1

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