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Home , Freakonomics, Steven Levitt

CentrePiece Winter 2013/14

What have contributed to our understanding of criminal behaviour and crime control? In the introduction to a new book he has co-edited, Olivier Marie explains the economic approach to crime and its importance in the analysis, design and evaluation of crime-fighting policies.

Lessons from the of crime s we approach the fiftieth as a guide, subsequent contributions from Policy choice anniversary of Nobel economics tended to adopt the view that During the tumultuous years of the 1960s, laureate ’s crime research was virgin territory. with riots in US cities and escalating rates seminal contribution Economists were initially not so welcome of crime and drug abuse, Congress created (Becker, 1968), it is fair to in and, for the most part, several high-profile commissions to assess Asay that the economics of crime is part of were unconcerned, feeling that they had the underlying problems and recommend the standard portfolio that makes up the little to learn from the ‘natives’. More effective reforms. When these commissions discipline. On both sides of the Atlantic, a recently, that separation between turned to the prominent criminologists of critical mass of academic economists has economics and criminology has begun to the day, they offered their opinions but specialised in the study of crime and its break down, an encouraging trend that had little in the way of relevant evidence. control. For example, a series of CEP studies can be traced in part to the growth of The political scientist James Q Wilson was has contributed to making sense of the multi-disciplinary public-policy a critical observer of criminology at the UK’s ‘riddle of peacefulness’ (Draca, 2013) programmes and think-tanks. time and observed that its sociological and analysing which policies can be most In a new book, we examine what orientation did not lend itself to evidence- effective in reducing crime (Marie, 2010). economists have contributed to the study based policy recommendations. Of course, social scientific study of of criminal behaviour and crime control Crime was understood to be caused by crime was well established by the time of and identify four key strands: culture and social structure. An analysis of Gary Becker’s contribution. Prior to that, these ‘root causes’ of crime provided little from the 1920s, the dominant disciplines n A normative framework for evaluating guidance for policy-makers, whose ability were and psychology, and that criminal law and crime prevention. to change structural aspects of society was continued as criminology departments and n The application of sophisticated very limited. Moreover, the sociologists schools were established in the post-war quantitative methods to analyse the were highly sceptical of deterrence, period. Becker chose to bypass rather than causes of crime and the effects of crime- denying a role for the criminal justice engage with that tradition, stating that ‘a control measures in this framework. system in controlling crime. In Britain, the useful theory of criminal behaviour can n The conception of criminal behaviour as lack of connection between criminology dispense with special theories of anomie, individual choice, influenced by perceived and policy was perhaps even greater, since psychological inadequacies, or inheritance consequences. the dominant ethos was against policy of special traits and simply extend the n The aggregation of individual choices engagement, in part because of its heavier ’s analysis of choice.’ into a systems framework for focus on the social context of crime. With this bit of disciplinary imperialism understanding crime rates and patterns. Among the social sciences, economics

7 CentrePiece Winter 2013/14

Crime can be analysed using the same apparatus routinely applied to and health

tends to be best suited for addressing the marginal benefit of an additional experiments, they have developed a much issues relevant to policy design. The reduction in crime. And just because crime more robust understanding of what causes economic model presumes that observed rates are declining does not mean that the crime and are now able to generate good behaviour is not the inevitable result of ‘crime problem’ is less overall – crime- estimates of the efficiency of different underlying social conditions, but rather control costs, such as large increases in the policy tools. results from individual choices influenced by prison population in most countries, One economist who has been perceived consequences. If government especially the United States, must be particularly creative in finding ways to policy can change those consequences, considered. identify the causes of crime is the University then behaviour change will follow. The normative framework also provides of ’s , whose research Furthermore, uniquely among the social guidance for evaluating specific (and subsequent emergence as a celebrity, and behavioural sciences, economics interventions. The economic question is not thanks to his 2005 book) has incorporates a well-developed normative limited to ‘what works?’ in crime control, done much to inspire subsequent cohorts framework that defines the public interest but ‘what is worthwhile?’ Cost-benefit of graduate students in economics. and lends itself to policy prescription. analysis provides a set of rules for Massive improvements in data quality Indeed, Becker’s contribution was answering that question, and more and availability have also made possible primarily in the normative realm. He generally encourages a comprehensive great progress in statistical investigations pointed out that the social costs associated approach to evaluation. into the causes of crime and what works to with crime are the sum of the direct costs reduce offending. of victimisation (and the threat of Quantitative methods victimisation) and the indirect costs of The other important feature of the Crime as a rational choice efforts to control and prevent crime. If the application of the normative framework has A simplistic but common understanding of goal is to minimise total social costs, then been the contribution by economists of crime is that the population can be divided the optimal amount of crime is unlikely to using advanced and innovative statistical neatly into two groups: good guys and bad be zero, since at some point the marginal methods. As economists have increasingly guys. In this view, the bad guys commit costs of additional prevention will exceed embraced the use of natural and field crime unless they are incapacitated, and the

8 CentrePiece Winter 2013/14

good guys are reliably law abiding. processes and capacities, such as self- which may frustrate the goal of making The economic model of crime shifts the control, empathy and rationalisation. unambiguous predictions or even keeping focus from character to the choices While there have been myriad track of all the relevant mechanisms. available to individuals. While certain evaluations of specific programmes aspects of character (or what economists intended to reduce rates of recidivism, Crime economics are inclined to call ‘preferences’) are surely there still remains considerable uncertainty Economists are here to stay in the study of not irrelevant, criminal activity represents about the overall effect of a spell of crime, the criminal justice system and crime a choice or set of choices that is available imprisonment on subsequent behaviour. prevention. They have brought with them a to everyone. strong presumption that criminal behaviour The choice of whether to commit crime Feedbacks and interactions can be modelled using the same conceptual is driven by the consequences, which differ Economics is a social science. The theory of apparatus that has been developed for risky among individuals depending on the individual behaviour serves as a building decision-making, labour supply, consumer opportunities available to them. For block for a theory of aggregate outcomes. and firm behaviour, and even market example, a school dropout will have The interacting systems that connect crime- structure and performance. relatively poor opportunities to earn a related choices by individuals to aggregate What’s more, criminal law and crime- legitimate living, but lack of schooling is no outcomes have not been fully worked out prevention programmes can be evaluated barrier to larceny or robbery. For that by economists, but the research literature using the same normative apparatus that is reason alone, we expect dropouts to be provides a start on this project. routinely applied to education, health and over-represented among active criminals. Criminal activity may be viewed as environmental regulation. This ‘technology This perspective leads naturally to a produced by individuals (active criminals) at transfer’ to the criminal domain, initiated by presumption that deterrence works – that a rate that is limited by the activities of the Gary Becker in 1968, has proven productive crime rates will be inversely related to the criminal justice system and private security for both scholars and policy- makers. likelihood and severity of punishment. But measures. The electorate chooses through the economic model also incorporates the the political process how much public idea that programmes to improve resource to devote to the criminal justice This article introduces Lessons from the legitimate life opportunities may have a system, and households and businesses Economics of Crime edited by Philip J Cook, deterrent effect through increasing the make myriad individual choices about how Stephen Machin, Olivier Marie and opportunity cost of time spent in criminal much private effort to devote to crime Giovanni Mastrobuoni, published by MIT activity or prison. prevention and avoidance. A further Press (http://mitpress.mit.edu/books/ People with something to lose are less complication is that the effectiveness of the lessons-economics-crime). likely to view criminal participation as criminal justice system is very much attractive, and crime reduction can dependent on private (often voluntary) Philip J Cook is at the Sanford School of therefore be achieved by influencing the life inputs, such as reporting crimes and Public Policy at Duke University. Stephen opportunities of potential offenders. For providing information and testimony during Machin is professor of economics at example, some recent studies have shown investigations. University College London and CEP’s that education has a large crime-reducing There are at least three noteworthy research director. Olivier Marie is at effect on cohorts of individuals that were feedback loops in this system: Maastricht University. Giovanni forced to stay longer at school because of Mastrobuoni is at the University of Essex. changes in minimum school leaving age n First, the capacity of the criminal justice legislation. system to control crime may be diluted by The economic focus on choices and an increase in crime rates, which then Further reading consequences does not preclude the causes a reduction in the likelihood or possibility that character is also important in severity of punishment – resulting in further Gary Becker (1968) ‘Crime and Punishment: influencing criminal involvement. Efforts to increases in crime. An Economic Approach’, Journal of Political rehabilitate criminals may focus on either n Second, an increase in the crime rate Economy 76: 169-217. increasing the quality of legitimate may raise the political salience of crime, opportunities (typically by improving human leading to increased criminal-justice Mirko Draca (2013) ‘The UK’s Riddle of capital or clearing away barriers to earning budgets and stricter sentencing, which may Peacefulness: What Explains Falling Crime?’, a legitimate living) or changing cognitive then rein in the crime rate. CentrePiece 18(1) (http://cep.lse.ac.uk/pubs/ n Third, an increase in crime may induce download/cp392.pdf). Criminal greater private efforts at prevention and avoidance of criminal victimisation, Steven Levitt (2005) Freakonomics: A Rogue behaviour results including actions ranging from locking up Economist Explores the Hidden Side of valuables and carrying a weapon, to hiring Everything , William Morrow. from individual guards or relocating commercial activity to choices influenced safer neighbourhoods. Olivier Marie (2010) ‘Reducing Crime: More by perceived Police, More Prisons or More Pay?’, CEP Observed crime rates are thus the Policy Analysis No. 12 (http://cep.lse.ac.uk/ consequences outcome of a complex interactive system, pubs/download/pa012.pdf).

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