Llad Phillips 1

Social WelfareSocial Welfare

The Impact of Crime on SocietyThe Impact of Crime on Society

Llad Phillips 2

Outline and IssuesOutline and Issues Course logistics: Course logistics: http://www.econ.ucsb.eduhttp://www.econ.ucsb.edu Criminal Justice System (CJS) & economic Criminal Justice System (CJS) & economic

paradigm: where do the values (prices) come paradigm: where do the values (prices) come from to evaluate the states (outcomes) of the from to evaluate the states (outcomes) of the CJS?CJS?

How much crime is there? How do we know?How much crime is there? How do we know? Crime has two effects:Crime has two effects:

Redistribution of welfare from the victim to the Redistribution of welfare from the victim to the perpetratorperpetrator

Opportunity cost or wast of resources for defenseOpportunity cost or wast of resources for defense

Recommended: Economics 160: References - also at The Alternative.

Economics 160 Phillips/Votey Winter 2007 Economics of Crime and Justice

Hour, Location: 8:00-9:15, Buchanan 1940 Instructors: Llad Phillips and Harold L. Votey, Jr. Office Hours: NH 3032, 9:30 - 10:00 TuTh and NH 2056, 9:30 - 10:00 TuTh, by

appointment, respectively Texts: Economics 160: Crime and Justice - A text for this course by Llad

Phillips and H.L. Votey, Jr. (P&V) - and Notes for Economics of Crime and Justice Both are available at The Alternative in I.V.

Midterm Date: Tuesday, Feb. 13, 2007. You will need a scantron sheet and #2 pencil.

Final Date: Friday, March 23, 2007, 8:00 - 11:00 am. You will need a scantron sheet

and #2 pencil.

Lecture Topics and Reading List I. Lecture One: “Introduction: What is the Economics of Crime and Justice?”,

Professor Votey Ch. 1 (P&V) "Introduction" Ch. 2 (P&V) "Formulation of the Crime Model: Theoretical Foundations"

References: E. J. Mishan, Cost-Benefit Analysis, Ch. 3 (RBR) Jack Hirshleifer, "The Expanding Domain of Economics", American

Economic Review, Dec. 1985 (RBR)

II. Lecture Two: “Social Welfare: Impacts of Crime on Society”, Professor Phillips

Ch. 3 (P&V) "Defining Crime and Establishing Policies for Control" Ch. 4 (P&V) "Establishing Monetary Measures of the Seriousness of Crime" References: C. T. Clotfelter, "Urban Crime and Household Protective Measures",

Andreano and Siegfried(Ed.) The Economics of Crime(1980)(RBR)

SERIOUSNESS SURVEY

RATE THE SERIOUSNESS OF EACH OF THE FOLLOWING BEHAVIORS ON A SCALE FROM ZERO( LEAST SERIOUS) TO TEN( MOST SERIOUS):

1. HOMICIDE ___2. MASS POISONING ( e.g. TYLENOL) ___ 3. FORCIBLE RAPE ___4. ARSON: SET FIRE TO A GARAGE ___5. SELLING HEROIN ___6. AUTO THEFT ___7. EMBEZZLEMENT OF $1,000 ___8. PROSTITUTE IN A HOUSE OF PROSTITUTION ___9. POSSESSION OF MARIJUANA ___10. SNIFFING GLUE ___

Llad Phillips 7

A Theme for this CourseA Theme for this Course Criminal Justice System is in crisis.Criminal Justice System is in crisis.

Courts have told Governor Schwarzenegger to find Courts have told Governor Schwarzenegger to find housing for prisoners or release them earlyhousing for prisoners or release them early

City and County jails are overflowing and a revolving City and County jails are overflowing and a revolving door policy is in effect. Repeat offenders clog the door policy is in effect. Repeat offenders clog the systemsystem

Not enough judges and prosecutorsNot enough judges and prosecutors

Llad Phillips 8

Llad Phillips 9

Llad Phillips 10

It Has Not Always Been This WayIt Has Not Always Been This Way The Criminal Justice System had been relatively The Criminal Justice System had been relatively

stable in the decade after World War IIstable in the decade after World War II What happened? That is the story of this course.What happened? That is the story of this course. We will review the history of criminal justice in We will review the history of criminal justice in

the 60 years since WW II.the 60 years since WW II. We will suggest policies that will help turn We will suggest policies that will help turn

things around now. In brief, what is needed is things around now. In brief, what is needed is triage, i.e. to use scarce resources that will triage, i.e. to use scarce resources that will improve public safety the most.improve public safety the most.

Llad Phillips 11

Social WelfareSocial Welfare

The Impact of Crime on SocietyThe Impact of Crime on Society

Llad Phillips 12

Questions about crimeQuestions about crime

Is crime a real problem or a media induced Is crime a real problem or a media induced problem?problem?

Is crime an economic problem?Is crime an economic problem? Are we getting our money’s worth for the Are we getting our money’s worth for the

dollars we spend on police, jails, and dollars we spend on police, jails, and prisons?prisons?

Llad Phillips 13

Taking CrimesTaking Crimes

RobberyRobbery BurglaryBurglary Auto TheftAuto Theft LarcenyLarceny

Llad Phillips 14

How is Crime MeasuredHow is Crime Measured

Victimization Surveys of HouseholdsVictimization Surveys of Households U S Dept of Justice, Bureau of Justice U S Dept of Justice, Bureau of Justice

Statistics, Statistics, Criminal VictimizationCriminal Victimization Citizen (Victim) Reports to PoliceCitizen (Victim) Reports to Police

U S Dept of Justice, FBI, U S Dept of Justice, FBI, Uniform Crime Uniform Crime ReportsReports

Sourcebook of Criminal Justice Statistics, http://www.albany.edu/sourcebook

http://www.fbi.gov/homepage.htm Uniform Crime ReportsMotor Vehicle Thefts, 1980-1999

0

2

4

6

8

10

12

14

16

18

20

80 82 84 86 88 90 92 94 96 98

Year

Ra

te

NCVS: per 1000 Households

FBI: per 1000 Registrations

Llad Phillips 16

Measures of Crime: Offense RatesMeasures of Crime: Offense Rates

Thefts per 1000 registrations(FBI) = Thefts per 1000 registrations(FBI) = registrations per household* thefts per 1000 registrations per household* thefts per 1000 households(NCVS)households(NCVS) if registrations per household were growing in if registrations per household were growing in

the 90’s then thefts per 1000 registrations the 90’s then thefts per 1000 registrations would not fall as fast as thefts per 1000 would not fall as fast as thefts per 1000 householdshouseholds

Llad Phillips 17

Crime in California, 2003 http://caag.state.ca.us

Llad Phillips 18

Trends In Crime in California

Source: Crime and Delinquency in California, 2002http://caag.state.ca.us/

Llad Phillips 19

Llad Phillips 20

Violent Crime Mix, CA ‘03Violent Crime Mix, CA ‘03

Llad Phillips 21

Homicide by Weapon, CA ‘03Homicide by Weapon, CA ‘03

Llad Phillips 22

Llad Phillips 23

California Crime Mix

Llad Phillips 24

California Crime Index: Property Crimes

Llad Phillips 25

California: Trend in Robberies Per Capita in 90’s

Llad Phillips 26

Types of Robberies in California, 1998

Llad Phillips 27

California: Armed Robberies, 54% of Total, By Weapon

Llad Phillips 28

Llad Phillips 29

Sourcebook of Criminal Justice Statistics: http://www.albany.edu/sourcebook/

Uniform Crime Reports, Crime in the United States, http://www.fbi.gov/ucr/03cius.htm

Bureau of Justice Statistics: http://www.ojp.usdoj.gov/bjs/Crime in California, http://caag.state.ca.us/cjsc/pubs.htm

California Department of Corrections, http://www.corr.ca.gov/

Sources of Criminal Justice Information On the InternetSources of Criminal Justice Information On the Internet

Llad Phillips 30

Two Perspectives On CrimeTwo Perspectives On Crime

No ProblemNo Problem It’s BadIt’s Bad

Llad Phillips 31

Crime as Income RedistributionCrime as Income Redistribution

The Robin Hood MythThe Robin Hood Myth Take from the rich and give to the poorTake from the rich and give to the poor

The impact on social welfareThe impact on social welfare depends on your views or valuesdepends on your views or values

socialist versus a capitalistsocialist versus a capitalist

Llad Phillips 34

Crime as a dead weight lossCrime as a dead weight loss Loss of resouces spent on defenseLoss of resouces spent on defense

protection of homesprotection of homes protection of carsprotection of cars protection of bicyclesprotection of bicycles

Resources spent on defense Resources spent on defense could be spent on goods and servicescould be spent on goods and services

in the absence of crimein the absence of crime

The impact on social welfareThe impact on social welfare Unambiguously badUnambiguously bad

Llad Phillips 35

What is the nature of crime?What is the nature of crime?

Income redistribution?Income redistribution? or dead-weight loss?or dead-weight loss?

Llad Phillips 36

Economists Assume You Know What You LikeEconomists Assume You Know What You Like Lingo: economists call these consumer Lingo: economists call these consumer

tastes or consumer preferencestastes or consumer preferences

Victim’s Income

Thief’sIncome

Victim’s Income

Thief’sIncome

Thief’s Preferences 1. More is better, greedy 2. Indifferent to victim

High

Medium

Low

Llad Phillips 39

Economists Assume You Can make ComparisonsEconomists Assume You Can make Comparisons For example: the thief can compare a high For example: the thief can compare a high

level of his income and a low level of the level of his income and a low level of the victim’s income victim’s income withwith a high level of his a high level of his income and a high level of the victim’s income and a high level of the victim’s incomeincome in the case just illustrated, the thief values these in the case just illustrated, the thief values these

the same since his income stays the samethe same since his income stays the same the thief does not care whether the victim’s income the thief does not care whether the victim’s income

is high or low, i.e. he is indifferentis high or low, i.e. he is indifferent

Victim’s Income

Thief’sIncome

Victim’s Preferences 1. more is better, greedy 2. indifferent to the thief

low medium high

Victim’s Income

Thief’sIncome

$6,000

$6,000

Income Distribution

Victim’s Income

$6,000

$6,000

Income Distribution

$12,000

Total or Social Income Line:Thief’s + Victim’s Income

$12,000

Thief’s Income

Victim’s Income

Thief’sIncome

$6,000

$6,000

Income Distribution

$12,000

Total or Social Income Line:Thief’s + Victim’s Income

$12,000

Income Redistribution$9,000

$3,000

Llad Phillips 44

Bad effects from taking crimesBad effects from taking crimes

Victim has less incentive to be productiveVictim has less incentive to be productive Victim has more incentive to spend time Victim has more incentive to spend time

and money on defenseand money on defense Analogous to war: guns vs. butterAnalogous to war: guns vs. butter What is society going to produce?What is society going to produce?

defense against crime?defense against crime? or goods and services?or goods and services?

Victim’s Income

Thief’sIncome

$6,000

$6,000

Income Distribution

$12,000Total or Social Income Line:Thief’s + Victim’s Income

$12,000

Income Redistribution$9,000

$3,000 $11,000

$1,000 socialcost of defense

$11,000

CrimeGeneration

Offense Rate,Damages toVictims

Fear

Media

Defense

Private Public

Llad Phillips 47

Cost to Victims in US, 1993Cost to Victims in US, 1993Offense Loss Rate Reported

OffensesDamages,Billions $

Robbery $13,000 659,757 $8.6

AutoTheft

$4,000 1,561,047 $6.2

Burglary $1,500 2,834,808 $4.3

Larceny $370 7,820,909 $2.4

Total $21.5

Source: National Institute of Justice, Victim Costs and Consequences (1996)

Assaulter’sIncome

Victim’s Income

Total or Social Income

Motivation for Violence: Antagonism

Assaulters Iso-preference Lines

High

Low

Llad Phillips 49

Damages: US Violence, 1993Damages: US Violence, 1993

Offense Loss Rate ReportedOffenses

Damages,Billions, $

Homicide $1,191,000 24,526 $46.8

Rape $87,000 104,806 $9.1

Assault $15,000 1,135,099 $17.0

Total $72.9

Source: National Institute of Justice, Victim Costs and Consequences (1996)

Llad Phillips 50

Types of CrimeTypes of Crime

Motivation: self-interest, greedMotivation: self-interest, greed Street Crimes: robbery, burglary, auto theft, Street Crimes: robbery, burglary, auto theft,

larcenylarceny White Collar: embezzlement, tax evasion, White Collar: embezzlement, tax evasion,

check fraud, telephone fraudcheck fraud, telephone fraud Status Offenses: runaway, truant, vagrant, Status Offenses: runaway, truant, vagrant,

beyond control of parentsbeyond control of parents Black Market: gambling, prostitution,drugsBlack Market: gambling, prostitution,drugs

Llad Phillips 51

Types of CrimeTypes of Crime Motivation: Hate, RageMotivation: Hate, Rage

Street Crimes: homicide, aggravated assault, Street Crimes: homicide, aggravated assault, raperape

Crimes Against Public Order: vandalism, Crimes Against Public Order: vandalism, terrorismterrorism

Hate CrimesHate Crimes Columbine HighColumbine High James Byrd: dragging death in TexasJames Byrd: dragging death in Texas Jewish Community Center in Granada HillsJewish Community Center in Granada Hills

Llad Phillips 52

1750 Reported Hate Crimes in California: 1998

Source: Hate Crime in California, 1998

Llad Phillips 53

About 2/3 of Hate Crimes are Violent

Llad Phillips 54

Sources of Informationp. of syllabusSources of Informationp. of syllabus US DataUS Data

Sourcebook of Criminal Justice StatisticsSourcebook of Criminal Justice Statistics http://www.albany.edu/sourcebook/http://www.albany.edu/sourcebook/

Bureau of Justice StatisticsBureau of Justice Statistics http://www.ojp.usdoj.gov/bjs/welcome.htmlhttp://www.ojp.usdoj.gov/bjs/welcome.html

Llad Phillips 55

SummarySummary

Crime is an economic problemCrime is an economic problem loss of resources(dead weight loss) from private loss of resources(dead weight loss) from private

and public defenseand public defense Damages to victims are 3 times as high for Damages to victims are 3 times as high for

crimes against persons compared to crimes crimes against persons compared to crimes against propertyagainst property Total for 7 FBI Index Crimes: $ 95 BillionTotal for 7 FBI Index Crimes: $ 95 Billion

Assaulter’sIncome

Victim’s Income

Total or Social Income

Motivation for Violence: Antagonism

Assaulters Iso-preference Lines

High

Low

Llad Phillips 57

Split Personality BehaviorsJack Hirshleifer: “The Expanding Domainof Economics”

Choice

Work and no violence

Work andbrawl in bars

(Economic Man,motive: self-interest))

(Economic Manwith episodes of antagonism)

choice

Work and no violence

Work andbrawl in bars

expect $24,000/yr

Apprehended: lose 1 month in court andjail, $22,000

0.1

0.9 Not apprehended$24,000

Expected income: 0.1*$22,000 + 0.9*$24,000 = $23,800

Llad Phillips 60

Trends In Crime in California

Source: Crime and Delinquency in California, 1998http://caag.state.ca.us/