Economic shocks and crime: Evidence from the crash of Ponzi schemes

Abstract

In November 2008, Colombian authorities dismantled a network of Ponzi schemes, making hundreds of thousands of investors lose tens of millions of dollars throughout the country. Using original data on the geographical incidence of the Ponzi schemes, this paper estimates the impact of their break down on crime. We find that the crash of Ponzi schemes differentially exacerbated crime in affected districts. Confirming the intuition of the standard economic model of crime, this effect is only present in places with relatively weak judicial and law enforcement institutions, and with little access to consumption smoothing mechanisms such as microcredit. In addition, we show that, with the exception of economically-motivated felonies such as robbery, violent crime is not affected by the negative shock.

Do negative economic shocks affect cognitive function, adherence to social norms and loss aversion?

“…The literature has argued that anti-social behavior may be driven by contextual factors, such as shocks, and not only by individual traits (Sharkey et al, 2016;Cortés et al, 2016;Bignon et al, 2017). Our results do not support the main tenet of this literature, although they are not conclusive.…”

Financial Literacy, Ponzi and Pyramid Scheme in Indonesia

“…These people, was classified to informed investors, namely those who had actual information about the investment model and influenced uniformed investors or those who had minimum information to join (Cortés et al, 2016). Moore et al (2012) who studied HYIP, also stated that the HYIP was a form of 'postmodern Ponzi scheme' because investors actually knew the mechanism of fraud committed by HYIP manager.…”

“…To find out the cause of this anomaly, psychological factors probably were able to be the right answer. Greenspan (2008), Cortés et al (2016) and Lewis (2012) stated that the psychological approach could give better answers to understand the reasons for a person to be involved in this scheme. Psychological factors that caused a person to join in Ponzi scheme were a situation, consciousness, personality and emotion (Greenspan, 2008).…”

Efectos del rebalanceo de los índices de J.P. Morgan en 2014 sobre los rendimientos de los TES en moneda local

“…Esta metodología, que es popular en la evaluación de impacto de programas sociales, estudios de evento o en la evaluación de los efectos de cambios regulatorios (ver p.ej. : Card & Krueger, 1994;Cortés, Santamaría & Vargas, 2016;y Cubillos et.al, 2019), se basa en la construcción de escenarios contrafactuales a partir de un panel de datos. En este caso, un grupo de 7 economías emergentes, de características relativamente similares 19 , permiten aproximar lo que habría ocurrido con los rendimientos de la deuda pública colombiana de no haberse dado el cambio en los índices de J.P. Morgan, para así aislar los efectos de este evento sobre los rendimientos.…”