4. The Economics of Criminal Justice Policy Allocating Criminal Justice Resources

Transcription

1 4. The Economics of Criminal Justice Policy Allocating Criminal Justice Resources R. Freeman (coursepack), 6. Crime Prevention Activities C. Fellows, G. Flanagan, S. Shedd, (coursepack), Public and Private Goods and The Economics of Crime Prevention Activities 1

2 A) Introduction So far in the course: Background. Costs of crime = benefits of reduction. Economic model of behaviour. Next: How much crime to prevent? What types to prevent? What methods to use? Stop existing criminals. Prevent future criminals. 2

3 Introduction cont d Governments have scarce resources must make choices. How do they choose? How should they choose? 3

4 B) Politics and Government Decision-Making Why do we have governments? Fairness to help those who are worse off. Efficiency to solve problems of market failure. 4

5 Actual Government Decision-Making Bureaucrats, MPs/MLAs, ministers, editorial writers, constituents, business leaders and organizations, union leaders and organizations, etc. Bureaucrats and police own goals and knowledge. Public fear of crime, over-reactions, political opportunism. 5

6 News Article Sask Party Demands More Police Police blamed a lack of resources and heavy call load for a 30-minute delay responding to a 911 call. We are always trying to set the optimum rate of police officers on the street Benefits of more police? Reduced response times, reduced crime. Costs not really discussed in the article. Taxes higher. Opportunity costs of reduced expenditures elsewhere. Role of political pressure clearly high. 6

7 Budget Process Federal Government Direct Spending on RCMP, prisons, etc. Provincial Governments Direct Spending on Police, courts, prisons, etc. Municipal Governments Direct Spending on Police, etc. Total Spending: $12.7 billion (2.8% of all gov t spending) 7

8 C) Efficient Government Decision-Making The efficient method involves cost-benefit analysis. Pick the choice that maximizes net social benefit = total social benefits total social costs. 8

9 1. Calculating $ Costs and Benefits Must appropriately discount future costs and benefits. Must translate social costs/benefits into $-equivalents. Direct costs and benefits are fairly straightforward. $-cost on more police. $-benefit of less stolen goods. Indirect/opportunity costs are harder. Cost of imprisonment for prisoners families? Benefit of less murders? 9

10 2. Calculate Net Benefits and Decide If a choice has social costs > social benefits never pick it. If two choices with net positive benefits pick the choice with the highest net benefit. If possible pick ALL choices with social benefits > social costs!! 10

11 Social Benefits and Costs Social benefits/costs private benefits/costs due to externalities. Negative externalities = external cost borne by others. Pollution. Speeding and bystanders. Criminal damage due to theft or violence. 11

12 Social and Private Costs MC SOC = MC PRIVATE + external cost. Private decisions ignore this too much output. Government intervention is efficient. 12

13 Positive Externalities Positive externality = external benefit received by others. Lighthouses, education, vaccination. Private security. 13

14 Social and Private Benefits MB SOC = MB PRIVATE + external benefit. Private decisions ignore this too little output. Example: private security. Problem: free-riding. Solution: government intervention. 14

15 Externalities cont d Result: It is sometimes efficient for governments to intervene. BUT, by how much? 15

16 Private Choices of Crime Prevention Locks, precautions, alarms, guards, guns, Households/firms: MB PRIV of crime prevention. Marginal benefits = Δ benefits from 1 more unit. MB = ΔTB ΔQ $ MB P Q of Prevention 16

17 Private Choices cont d Households/firms: MC PRIV of crime prevention. Marginal costs = Δ costs from one more unit. MC = ΔTC ΔQ $ MC P Q of Prevention 17

18 Private Choices cont d Households/firms optimal decision where MB PRIV = MC PRIV. $ MC P MB P Q* PRIV Q 18

19 Private Choices cont d Households/firms optimal decision where MB PRIV = MC PRIV. Why not Q 1 > Q* PRIV? $ MC P MB P Q* PRIV Q 1 Q 19

20 Private Choices cont d Households/firms optimal decision where MB PRIV = MC PRIV. Why not Q 1 > Q* PRIV? Why not Q 2 < Q* PRIV? $ MC P MB P Q 2 Q* PRIV Q 20

21 Private and Public MB If external benefits of security: MB SOC > MB PRIV. $ External Benefit MB SOC MB P Q of Prevention 21

22 Private versus Social Choices cont d Households/firms optimal decision where MB PRIV = MC PRIV. SOCIAL optimal decision where MB SOC = MC PRIV. At Q* SOC > Q* PRIV. $ MC P MB SOC MB P Q* Q* SOC PRIV Q 22

23 Public Prevention Result we need: Q PUBLIC = Q SOC Q PRIV. $ Optimal Q PUBLIC MC P MB SOC MB P Q* Q* SOC PRIV Q 23

24 The Optimal Amount of Crime Prevention Public prevention > 0 Crime* < Crime (no public). Should we have 0 crime? Should we have 0 government intervention? Where is Q* SOC? Overall how many police and prisons. Which crimes to focus on? Cost-Benefit Analysis 24

25 Changes in Costs of Crime Prevention What if costs of crime prevention? $ MC 1 MC 0 MB Q* Quantity of Crime Prevention 25

26 Changes in Costs of Crime Prevention cont d Then optimal quantity of crime prevention falls to Q**. $ MC 1 MC 0 MB Q** Q* Quantity of Crime Prevention 26

27 QUESTION the Impact of Societal Changes Child pornography: It is easier to produce and distribute due to the internet? It is much less tolerated? How would these two changes work in terms of our MB/MC? 27

28 Question How would we show the impacts of an action going from being criminal to being legal? Abortion, homosexuality, inter-racial marriage? 28

29 CBA s Cousin: Cost-Efficiency Analysis Two choices, each crime by 10%. Cost-efficiency: pick the cheapest method. Benefits ratio is also the highest for this Costs method. Cost-efficiency cost-benefit analysis. 29

30 D) Which Crimes To Fight? Different crimes different benefits and costs different amounts of prevention. Murder vs. burglary? Terrorism vs. shoplifting? Maximizing net social benefits focus on: High MB (prevention), low MC (prevention). What if high MB AND high MC? 30

31 The Benefit-Cost Ratio Rule Benefit-cost rule: Look at the ratio : MB MC Burglary Shoplifting Marginal Benefit MB B = 8 MB S = 24 Marginal Cost MC B = 4 MC S = 6 MB/MC MB MC MBS MC S B B 8 = = = =

32 The Benefit-Cost Ratio Rule cont d We can see that: MB MC S S = 4 > 2 MB MC This is not a social maximum: = B B Shift 3 units ($12) from fighting burglary to fighting shoplifting. More burglary loss of MB = $24 = 3 x 8. $12 for shoplifting 2 more units. Less shoplifting gain of MB = $48 = 2 x 24. Net gain to society of $48 $24. 32

33 The Benefit-Cost Ratio Rule cont d Conclusion: focus on crimes with a high benefit/cost ratio. BUT, can we easily measure MBs and MCs for each crime? 33

34 Which Neighbourhoods Should We Focus On? 2004 Crime Totals Hillsdale Whitmore Park Cathedral North Central Total Crimes against Persons Total Crimes against Property Total Crimes Population 5,795 6,425 7,085 10,350 Crime "Rate" Average Household Income $62,377 $71,406 $44,848 $30,582 Incident of Low Income 21.50% 5.50% 22.50% 47.20% 34

35 Which Neighbourhoods Should We Focus On? Should we reduce crime rate in each neighbourhood to an equal rate? Fairest? But ignores costs overall crime higher! Should equalize MB/MC? overall crime lowest. But, politics... 35

36 6) Prevention, Deterrence, and Punishment If we had an extra $100 million, where should we put it? More police? More prosecutors? Changing laws? More prisons? More spending on socioeconomic reform? 36

37 Parole violations no fewer with new rules, study says Dean Beeby, Globe and Mail, May 20, 2003 A pilot program that keeps a closer watch on paroled criminals looks to be a flop. (A) test program begun in March, 2002 requires parole officers to have a minimum of eight face-to-face meetings with paroled offenders each month. Previously, officers met with them two or four times a month No Gain After three months, 70 percent of offenders in the (test) program were back in prison compared to 71 percent from the (control) group Doubling the supervision appeared to have had no impact. More Cost

38 1. Policing Empirical studies more police reduced U.S. crime in the 1990s. Therefore, MB > 0. But, which type of policing: Community policing? Focused on specific criminal activity? The so-called broken windows approach? 38

39 2. Courts and Prisons Recall the five potential reasons for punishment: Incapacitation. Retribution/Vengeance. Rehabilitation. Compensation of victims. Deterrence. Specific deterrence. General deterrence. 39

40 News Article: Deterrence and the YCJA Do youths react rationally to deterrence? The Supreme Court: the Youth Criminal Justice Act does not aim at deterrence, but at rehabilitation. The current federal government doesn t agree: accountability and responsibility. 40

41 Courts and Prisons cont d Empirical studies: prisons do deter criminals MB > 0. But, certainty of conviction >>> a longer sentence. Levitt: too many criminals at too high a cost MC > MB. $142/day (provincial) $259 (federal). 41

42 3. Fines Becker: fines (with proceeds given to victims) are much more efficient than punishment. Or, perhaps 42

43 4. Restorative Justice Restorative justice views crime as a violation of people and relationships and attempts to address the repercussions and obligations created by harm, with a view to putting things as right as possible. Key: Criminal held accountable, less likely to re-offend? Repair and restore helps with closure? 43

44 Examples of RJ Victim-offender mediation. Sentencing Circles. Family or Community Group Conferencing. Related but different: diversion by police before we get to the criminal court system. 44

45 5. Socioeconomic Change Longer-term alternatives: Pre-school and early childhood intervention. Family-based therapy for difficult children. Treatment programs for juvenile delinquents. Labour market interventions to raise job skills. Bribing people to finish high school. 45

46 6. Legalization or Criminalization? WAS illegal, now legal: Alcohol, lottery tickets and other gambling, birth control pills, abortion, various sexual acts, interracial sex, homosexual sex, sex outside marriage, leaving your reservation without prior permission, etc. WAS legal, now illegal: LSD/opium/marijuana, sex with someone under 18, gambling over the internet, dumping toxic waste, beating your wife, smoking in a classroom. 46

47 In-Class Exercise (I) Suppose you ve been hired by the The Recording Industry Association of America to use the economics of crime approach to reduce downloading. How would you do this? Think both traditional anti-crime policy and nontraditional. 47

48 In-Class Exercise (II) Is the prevention of downloading by the methods described SOCIALLY optimal? How would we decide what is socially optimal, as opposed to privately optimal for the companies? 48

49 8) Conclusions How should governments decide between various options for fighting crime? Cost-benefit analysis select those options with the highest B/C ratio. If we had $100 million, where should we spend it? 49