Crime and Incentives

In response to my post about some of economist Gary Becker’s views on crime, “russ” leaves a comment with a couple of interesting points:

I would think the failure of the war on drugs is the evidence AGAINST Becker’s idea that increased punishment reduces crime.

Just because criminalizing drugs hasn’t made them go away completely doesn’t mean that criminalization has no effect at all. After all, we’ve seen what happens when criminalization is undone: Certainly more alcohol was sold after prohibition was repealed than while it was in force, and the home-brewed beer industry exploded after that was legalized. I assume that criminalization is suppressing a lot of drug sales and consumption that would be occurring if drugs were legalized.

Becker is just saying that if you punish people for engaging in certain behaviors, people will be less likely to engage in that behavior. It’s just another variation of the general economic assumption that people will respond to incentives. Since Becker started studying the problem, economists have generally discovered that criminals are making the same kinds of risk/reward decisions as everybody else does. In other words, the movie Trading Places has a lot of truth to it: If you took a bunch of Wall Street bond traders and stuck them in the same circumstances as poor, uneducated inner-city minority youths, they would make many of the same life choices, and some of them would choose the high-risk/high-reward life of a crime. If you changes people’s incentives, you change their behavior. It happens all the time.

Of course, maybe the problem is that only those with a vested interest in prosecution consider the drug trade a crime. After all, non-fraudulent transaction between willing buyers and willing sellers are not really crimes.

I’m right with you there, although it’s more than just police and prosecutors and prison guards lining their pockets. There’s some genuine social disapproval of a lot of consensual crimes. People are busybodies, and they assume that anything that they don’t like is probably not important.

The death penalty was supposed to deter crime but there is no evidence that it has. Perhaps Becker’s theory that crime is subject to a cost-benefit analysis only applies to theft/fraud crimes.

I’ve heard mixed reports about the effectiveness of the death penalty. Some studies find a deterrent effect, and others do not. I’ve heard that in those studies that have found an effect, much of it goes away if you drop Texas from the data set. On the one hand, that doesn’t prove the study is wrong — of course the results of a study will change if you cherry pick the data — but it’s interesting that it all depends on the state with the most executions. Perhaps the deterrent effect doesn’t show up unless you execute a lot of criminals.

More generally, I believe studies have shown that deterrence effect is not as sensitive to the severity of the punishment as it is to the immediacy and certainty of the punishment. This would be consistent with the idea that the criminal personality includes a high tolerance for risk and that criminals discount the future heavily. So if we want to fight crime, it’s more important to make the punishment swift and sure than it is to make it harsh.

4 Responses to Crime and Incentives

  1. “This would be consistent with the idea that the criminal personality includes a high tolerance for risk and that criminals discount the future heavily.” – I think this is spot-on and a huge part of the problem.

    “So if we want to fight crime, it’s more important to make the punishment swift and sure than it is to make it harsh.” – I think this may be true, although I wouldn’t list it as the solution (especially in light of all sorts of practical factors that delay cases). It would seem to me that the best way to combat crime wouldn’t be to focus on punishment so much as it would be to help would-be criminals see that they do have some sort of future and that crime could seriously affect it.

    There’s a whole culture of people who, unfortunately, see “going to prison” as something that’s just part of life. If there were some way to combat that mentality, we’d probably see crime rates fall substantially.

    • Sounds reasonable to me. Since I’m talking about incentives, the flip side of punishing people for bad behavior is rewarding them for good behavior. The great thing about rewarding people for good behavior is that you don’t need a special system for doing it. The real world does it for you. If you are willing and able to do something that helps other people, they will be willing to pay you to do it.

      But when you’re poor and uneducated and just a teenager, that system doesn’t work very well. So maybe we need some sort of artificial system — a sort of justice system in reverse that rewards young people for good behavior instead of punishing them for bad behavior. This would be easier to make swift and certain because it doesn’t need a lot of procedure: Show up for school every day for a week, get $15. Get a B or better in class, get $100. Take and pass a voluntary drug test once a month, get $50… I’m just blue-skying here, but the idea is to teach at-risk youths that there is value in behaving yourself…

      I don’t know…the problem of generational poverty is a hard one…

      • If you haven’t already seen it, I’d suggest watching the documentary that does just that: Interesting results.

        I think there’s a certain segment of (especially) the juvenile population where that sort of thing is just never going to work. Both because many of the kids weren’t socialized to buy into that, but also because there’s a certain pig-headedness to teenage boys that has many of them bucking back just to show they can’t be controlled (that’s how I was back in the day).

        The more I do this, though, the more I realize that there are so many unknown variables in the equation that fashioning the “best” system is an onerous task. For example, DUI arrests are sharply down again (for about the 5th year). There’s a lot of talk about the cause, but I have a few friends who are convinced it has more to do with the indoor smoking ban than anything… which, if true, is completely isolated from the whole risk/reward matrix. I don’t remember anybody predicting that too happen at the time the ban went through.

        • I figured someone had probably already tried something like that. I know that scientists have experimented with similar incentive programs with heroin addicts. It turns out that if you offer to pay heroin addicts for clean daily drug tests, you don’t have to offer very much to get a large number of them to stop using heroin. It greatly increases completion rates in rehab programs.

          Like you say, though, there’s a lot of complicated things going on, and there probably aren’t any simple solutions. And for some of the criminals, I suppose that locking them in a cage and throwing away the key is the only thing that will protect society from them. But for many others, there’s probably a better way…

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