Thou shalt not steal

Left unchecked crime would create winners (criminals) andlosers (victims), a fact which has obvious equity implications.   But crime alsohas economic costs, not just to victims but to society as a whole.   The vastmajority of crimes do not simply involve a transfer of wealth or enjoyment fromone person to another, but a net loss to society.

Take property crime for example, which leads to inefficientallocation of resources.   If someone steels your TV, chances are they will needto pawn it off at a fraction of what it is worth to you.   Unlike voluntarytrade, crime does not allocated goods to the people who value them the most.   

Because most people understandably take precautions againstcrime, theft usually creates collateral damage to property.   Consider the costof broken windows, forced locks, and property that is taken but then discardedduring escape.   An offender may cause thousands of dollars of damage in orderto steal just a few hundred dollars worth of goods.   Think also of the amountof money spent on locks, security services and insurance premiums that wouldnot be required if we lived in a more honest society.

Violent crime comes with its own set of costs such asinjuries, hurt feelings, and quality of life impacts for the victims of crime.  Some psychologists dedicate their lives to figuring out what motivatesoffenders to commit crimes such as assault, rape, and murder.   But whatever thecriminal’s motivation may be, the costs imposed on victims are huge.

Such huge costs provide a strong justification for spendingmoney on fighting crime, but society’s resources are limited.

A police officer on every street corner would probably seecrime all but wiped out, but there is a point at which the cost of eliminating someof the more minor crime exceeds the benefits.   At this point it is cheaper tocompensate victims (or let them wear the cost) than to throw more money at tryingto completely eradicate crime.

The politicians decide how much money will be spent on thepolice and the justice system.   Any perceived increase in violent crime isusually met by a promise for more police resources, otherwise policy makersface political backlash.   But politicians know that crime cannot be completelywiped out with current technology and resources.   Furthermore, the public havelargely come to accept that the police have limited resources to deal with lessserious crime such as minor thefts.

The police have a virtual monopoly on the use of force tofight crime, but there is still a lot that private individuals can do.   Burglaralarms have become increasingly common over the last decade or so as the costshave come down.   Many businesses and even homes now have security cameras andother equipment to protect their valuables.  

If we can’t stop all crime then the next best alternative isto be able to catch the criminals, which raises the issue of punishment.   As aneconomist, I tend to take a deterrent rather than a retributive view ofsentencing.   Those who have crimes committed against them or their loved onesunderstandably cry out for "justice".   But when forming a legal framework weshould keep the end goal of lower future crime in mind.

Take the three strikes law for example, which has beenwidely criticised by legal experts.   It violates the principle that a moreserious crime should carry a more serious sentence.   Marginal deterrence can beeffective in stopping a less serious crime escalating.   An armed robbery caneasily turn into murder or manslaughter.     If the criminal is on their thirdstrike, they could already be facing a lengthy jail sentence if caught.   Killingthe witnesses could in fact lower the probability of being caught and henceincrease the expected return to their crime.

We may laugh at the notion that criminals are rationalpeople who respond to incentives like the rest of us.   But for those without astrong moral compass, the decision to go through with a crime is generallybased on the cost of getting caught, multiplied by the probability of gettingcaught, weighed up against the expected gain from committing the crime.

Of course most criminals don’t sit down and perform thesecalculations, gun at the ready, before deciding whether to commit a crime.   Butthe same could be said about going shopping, or engaging in risky activitiessuch as adventure sports.   On some level we are always weighing up the expectedcosts and benefits of what we do.

We need to accept that crime cannot be completely eradicatedwith current technology and resources.     But with the right combination ofpolicing, deterrents, and private efforts, we can minimise the harm caused bycrime.



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