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The Economics of Crime and Punishment

Photo: Mauricio Alejo

by R.M.B Senanayake-October 17, 2015

People ask whether there is evidence that the death
penalty is a more effective deterrent than imprisonment. Of course where
the death penalty is concerned it is a deterrent at least to those criminals
who committed the crime as they will no longer be available to commit
crimes. But people want to know whether the death penalty will deter
other would-be criminals who would commit crimes. People may also want
proof that it is in fact a deterrent. This requires one to show that there is
some correlation between the punishment and the trend to commit crimes.
If the death penalty is re-introduced will there be some reduction in
crime?  It will be necessary to study situations before and after the death
penalty is introduced. Then it must be shown that there is adequate
correlation between the two factors. At the outset it must be stated that
even if there is correlation between crime and punishment, yet it is difficult
to state that the correlation reflects causality between the two.
Differentiating between correlation and causality is difficult. But when
analyzing the impact of crime policies, it is the critical factor.  What results
then are available in the literature of the economics of crime?
Economist Steven Levitt has carried out research into crime and
punishment. He like other statisticians before, has started by drawing

attention to the difficulties of identifying causation for correlation does not
always indicate causation. There may be a third cause not identified which
may produce the relationship. For instance, one city may have a violent
crime rate four times higher than that of another, and it also has twice as
many police per capita. This does not mean that more police cause more
crime. A likely explanation for this relationship, however, is that high crime
rates lead cities to hire more police; not that police cause crime. So at the
outset it must be stated that reliance on such correlations provides no
reliable guidance for public policy.
Much of the debate about whether to restore the death penalty or not
cannot be resolved on correlations alone. Those who want to restore the
death penalty point to the recent increases in heinous crimes particularly
the brutal killing of innocent children. But if they are called upon to prove
that these crimes are due to the suspension of the death penalty, then it is
almost impossible to do so.  Identifying the causal link between increases
in crime and the severity of the punishment is difficult to prove for there
could be a third factor accounting for both trends. If criminals are locked
up or meted out the death penalty they are no longer available in society
to commit crimes. So theoretically when criminals are locked up there may
be fewer crimes because they are not out in the world to commit crimes.
But this is valid even for criminals who have been sentenced to death but
not executed. So it is not possible to draw a clear cut distinction between
the consequences of the suspension of the death penalty and
imprisonment to account for the increase in crime.
What is the impact of
police on crime?
 Does an increase in the number of policemen lead to a reduction in
crime?   Again research is not conclusive.  The negative relationship
between the number of police personnel and the incidence of crime is
equally difficult to establish. In order to do so, some researchers have
considered the relationship between the number of prisoners and crime
rates to determine the relationship between crime and punishment. But
again the relationships are not conclusive. For despite an increase in the
number of policemen crime may still increase. The time taken to hear and
determine a criminal case, which is said to be as long as eight years in our
country, will affect the prison population. So the prison population may
increase even without an increase in crime when criminal cases take that

long to complete; the prison population may not only be related to the
number of crimes but also to the time taken to hear and complete a
criminal case. Such population as such may be unrelated to the number of
crimes and the crime rate and more related to the time taken to hear and
complete a criminal case. Although lawsuits affect prison populations, they
may be otherwise unrelated to crime rates.
Deterrence,   Incapacitation,
and the Response of Criminals
to Incentives
Economist Becker’s well-known economic model of crime is based on
deterrence: potential criminals alter their behavior in response to changing
incentives. Empirically, however, it is often difficult to distinguish between
deterrence (which is a behavioral response) and incapacitation (in which
reductions in crime are attributable solely to criminals being unable to
commit crimes because they are locked up). Virtually all of the empirical
work that purportedly supports the economic model of crime is equally
consistent with incapacitation or being locked up in prisons.  So it is
difficult to argue whether prison sentences or the death penalty is more
effective since both result in incapacitation or some imprisonment as well.
Both deterrence and incapacitation also predict that changes in the
expected punishment for one crime (burglary, for example) will lead to a
decrease in that crime. Thus, this prediction cannot be used to distinguish
between deterrence and incapacitation either, for both cause the same
Consider what will happen in the case of a second crime. For example if
the expected punishment for burglary rises, will it mean that criminals will
substitute theft of cars or other valuables? Deterrence predicts that
criminals will substitute car theft for burglary of houses. Incapacitation, on
the other hand, suggests that levels of both crimes will fall. So using this
insight empirically it seems to show that deterrence is more important
than incapacitation, particularly for property crime. But this still leaves the
issue of deterrence versus incapacity in the case of crimes against person
that remain unresolved.
There is also the use of deferred punishments. Today imprisonment is

often deferred by our courts until a second crime is committed since there
is said to be overcrowding in the prisons. But this practice may undermine
the effectiveness of imprisonment since the probability of having to face it
is lower and this may reduce the deterrence effect of a prison sentence.
In California there is the practice of enhancing sentences for certain
crimes. Sentence enhancements are additional penalties tacked on to a
base sentence as for example when the accused has committed a similar
offence earlier. I think we should consider sentence enhancements too in
addition to the deferment of sentences. These sentence enhancements
could be imposed on some heinous crimes like the killing or sexual assault
of children below the age of ten or fifteen for example. Sentence
enhancements could also be used for those with a criminal history or for
the use of a weapon to commit the crime. Since the enhancement of
sentence is an additional penalty it could be a stronger deterrent.
Research in USA, has shown that such an enhancement of punishment
increases the deterrence effect immediately but it may not necessarily last.
This suggests that punishment has a deterrent effect although the relative
importance of it over time may be overshadowed by other factors.
Sentence enhancements are additional penalties tacked on to a base
sentence (as a result of, for instance, past criminal history or use of a
weapon). Since the enhancement increases the expected punishment, it
will increase deterrence. We should give the magistrates and judges the
power to enhance the base punishments.
There is also the relationship between crime and punishment for
juveniles. In the USA over the last two decades, juvenile crime has grown
at a much faster rate than adult crime. Whether it is so in our case is
difficult to find out since there is no published data. But we know that both
the adult population as well as the juvenile population subject to
punishments for crimes has increased.
In the USA they studied the relationship between crime and punishment
for juveniles.  Over the last two decades, juvenile crime was found to have
grown at a much faster rate than adult crime. During that same period, the
adult prison population had grown dramatically, but the number of
juveniles in custody has not. So it is possible that changes in relative
punishment can explain 60 percent of the differential growth rates in
juvenile and adult crime over the period, says one researcher. Moreover,
sharp changes in criminal involvement with the transition from the juvenile

to the adult court suggest that deterrence, rather than simply
incapacitation, plays an important role. So deterrence seems to work for
juvenile criminals although there is no such evidence in the case of adults.
What then should be our final conclusion? It is highly probable that
deterrence works for adults as well and hence it is worth reviving the
death penalty for a time to consider whether it would lead o a reduction of
crime. Since we did not take into consideration our crime rate when
initially deciding to suspend the death penalty, we could once again
suspend it if there is no proof that it reduces crime.
Posted by Thavam