Becker's Economic Theory Of Crime

No review of the economics of crime is complete without mention of the seminal paper by Becker (1968). In Becker (1968), the author outlines an optimal choice model for crime that assumes criminals are rational actors like everyone else. Perhaps more important than the model itself are its implications. From Becker (1968), we may conclude that fines are more efficient than prison time but that fines may also distort the margins of criminal choice. Furthermore, Becker (1968) argues that a low probability of punishment in combination with very severe penalties is the best way to minimize diseconomies associated with crime.

Following Becker’s (1968) economic theory of crime, several other essential publications established the theoretical foundation

For these issues, the literature is inconclusive at best. Concerning guns, Duggan (2001) concludes that gun ownership increases homicide while Lott and Mustard (1997) find that concealed carry reduces crime. With respect to abortion, Donohue and Levitt (2001) have shown that abortion significantly reduced crime in the second half of the 20th century – a question that economists are understandably reticent to study further. For policing and incarceration, some research has found that criminals are responsive to variations in expected punishment such as in Drago et al. (2009) and Freeman (1994) while policing efforts as shown by Chalfin and McCrary (2013) may have a relatively modest effect on crime at best. As a whole, the study of such alternative determinants of crime cannot serve as the basis of any conclusions other than to say that in some cases these alternative mechanisms seem to provide support of economic

In perhaps the best work done yet, Cook and Zarkin (1985) put forth a number of hypothesis explaining the relationship between crime and the business cycle. First, the quality and quantity of economic opportunity varies with the business cycle and thus incentivizes crime at certain times; second, recessions may discourage crime by reducing the quality of criminal opportunities; third, criminal commodities such as alcohol or handguns may be easier to obtain and abuse during good times; fourth, recessions may promote crime by reducing the ability of the criminal justice system to combat crime due to reduced income from taxes; fifth, recessions may promote victim cooperation and thus disincentivize crime (Cook & Zarkin, 1985). Of Cook & Zarkin’s (1985) suggestions, none appear to be well supported by the literature, which is not to say that they do not have an effect on crime at all but rather that it may be hard to detect or is