Integrating Market Alternatives Into the Economic Theory of Optimal Deterrence

Abstract

Leading economic models of crime assume that potential criminals achieve their ends by criminal means or not at all. We develop a framework in which potential criminals can also attain their objectives through voluntary trade. Our framework helps explain several features of the legal system that have proven to be problematic for the canonical approach: why optimal sanctions should be increasing in an individual's criminal history, and why necessity may be a partial defense in some situations. Finally, the inclusion of a voluntary trade option makes the maximization of a utilitarian welfare function identical to minimizing the costs of crime, implying that a long-standing controversy in the literature is, in part, an artifact of the assumption that criminals face a binary choice set. (JEL K42, D60, H00)

Penalty Structures and Deterrence in a Two‐stage Model: Experimental Evidence

“…In other related work, Polinsky and Shavell (1998) find that, in some cases, it is optimal to punish old first-time offenders less severely than old repeat offenders and young first-time offenders. Recently, Curry and Doyle (2016) developed a model of crime that includes the possibility of legal voluntary trade; the results of this model are that optimal penalties minimize the costs of the crime and penalties are increasing in criminal history. are male, less risk averse, and have committed offenses in previous rounds.…”

Deterrence Theory: Key Findings and Challenges

“…The "society has branded the utility derived from such activities as illicit," Stigler added, without offering any evidence that society recognizes as much as the concept of utility, let alone brands some kinds of utility as different from others. Adopting Becker's view leads to the inescapable conclusion that society should allow efficient crimes (as well as efficient torts)-the result that at least in some cases economists find to be distasteful (Curry andDoyle 2016, Dharmapala andGaroupa 2004). Adopting Stigler's view leads to an uncomfortable realization that society's "branding" of "illicit utility" is quite contingent.…”

“…that criminal law aims to induce putative criminals to achieve their objectives through voluntary market exchanges-a notion that is easier to accept for some crimes (property theft) than others (rape or battery). When market exchange is added to the choice between committing a crime or doing nothing, Curry and Doyle (2016) show, maximizing social welfare becomes equivalent to minimizing the cost of crime. Because the offender's gain is not part of this cost, there is no need to decide whether gains of some offenders should count or not.…”

“…Because the offender's gain is not part of this cost, there is no need to decide whether gains of some offenders should count or not. Curry and Doyle's (2016) analysis explains several features of criminal law such as the use of criminal history in sentencing and the necessity defense. Raskolnikov (2014) avoids the same question by focusing on a subset of socially undesirable acts where the offender's gain is always equal to the victim's harm.…”

“…Mungan 2014identifies three main types of explanations: the stigmatization effect of the first penalty, the variation in offender's propensity for crime, and the offender's learning how to escape punishment (Mungan 2014:190-91 citing sources). Curry and Doyle (2016) show that higher sanctions for repeat offenders are optimal if these offenders have a market alternative to achieving their criminal objectives, and if criminal history reveals that the offender cannot be cheaply deterred. Miceli and Bucci (2005) show that if the criminals' opportunities to earn income legally decline as they commit more crimes, sanctions should be higher for repeat offenders under some restrictive assumptions.…”