Economic Crime

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By Lydia Long PhD. | February 1, 2013

America’s next waron crime must look at the full spectrum of solutions and pay special attentionto giving those people who are most likely to turn to crime the skills andincentives to make a better choices.  Economists suggest we should consider newcrime fighting programs that are based on economic principles. With close toSEVEN million people under correctional supervision, states cannot afford tocontinue supporting huge prison populations. It’s time to examine some economic solutions to crime. Economic theoriesof crime are based on the premise that crime is a choice.  Hedonistic calculus is the premise that mostof us have a lot to lose if we get caught if we commit a crime and generallythe temptations of crime are not strong enough to outweigh the costs.  While character and culture can influencedecisions, bottom line, crime seen as the best available option.  {{more}}However, the calculus for an unemployeddropout with readily available criminal options and few licit prospects islikely to appear quite different.  Thethreat of arrest and imprisonment is sharper for those who have something tolose, so giving at-risk people a bigger stake in the law-abiding life is adeterrent to crime. In today’s labormarket, people who don’t have high school diplomas have poor job prospects andvery little to lose in economic terms, so it’s not surprising that two-thirdsof the inmates in state prisons are high school dropouts. In about half thestates it’s legal to drop out of school at age 16, but between the 1960s and’80s some states increased their minimum age to 17 or 18. Those changes providea natural experiment in the effects of extra schooling on crime. Researchers foundthat people in the birth cohorts that were forced to stay in school longer hadlower crime and incarceration rates as adults than their predecessors did. Oneextra year of high school reduced arrest rates for young men by about 11percent. It’s not clear what caused this improvement — everything from bettereconomic prospects to the influence of a more salutary peer group could be afactor — but it is a remarkable finding that has been confirmed by similarstudies in Britain and Italy. At a time whenstate budgets are under severe strain, an increase in mandatory schoolattendance would be a huge burden. But, additional money for schools could comeout of the states’ prison budgets. If prison sentences were adjusted to reduce the size of the prisonpopulation by about 400,000 people spending on corrections would decline by about $12 billion, enoughto fund an additional 1 million students per year. Additionalschooling would have a range of positive effects beyond crime reduction. Peoplewho earn high school diplomas enjoy better health, improved employmentprospects, and greater success in forming families. The same can’t be saidabout those who serve longer prison terms. Another economicbased proposal zeroes in on improving the quality of individuals’ decisionmaking rather than changing the options confronting them. It’s obvious that inconsidering criminal opportunities, people often make foolish, impulsivechoices. There are many reasons for that, but surely one of the most importantis intoxication. Public policies that reduce alcohol abuse are an obvious crimeprevention measure. Many studies show that alcohol is a significant factor invarious kinds of crime. Victim reports suggest that about one-third of thosewho commit rapes and other sex crimes and one-quarter of those who commitassaults have been drinking. One straightforward way to reduce this sort ofcrime is to raise the price of beer, wine, and hard liquor. Raising it to 55cents might not seem like a big increase, but it would be enough to persuade,say, some teenagers not to pick up that second six-pack for Thursday night.Research suggests that a 55-cent tax would reduce beer consumption by aroundsix percent. And there would be significant fringe benefits, including fewerauto accidents and more money for state treasuries.    As a nation we havethe highest incarceration rate in the world. Currently, our prisons warehouse individuals who use incarceration as anopportunity to hone their skills.  Theyhave nothing to lose and nothing invested in our community, and thus no reasonto stay out of prison.  Prisons are nolonger a viable solution to crime control. We need to stop funding our crime control solutions on emotions and turnto economic long term solutions.