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Posts tagged Deterrence
The Law and Economics of Guilt and Shame

By Ian Ayres, Joseph Bankman, & Daniel J. Hemel

The negative moral emotions of guilt and shame impose real social costs but also create opportunities for policymakers to engender compliance with legal rules in a cost-effective manner. We present a unified model of guilt and shame that demonstrates how legal policymakers can harness negative moral emotions to increase social welfare. The prospect of guilt and shame can deter individuals from violating moral norms and legal rules, thereby substituting for the expense of state enforcement. But when legal rules and law enforcement fail to induce total compliance, guilt and shame experienced by noncompliers can increase the law’s social costs. We identify specific circumstances in which rescinding a legal rule will improve social welfare because eliminating the rule reduces the moral costs of noncompliance with the law’s command. We also identify other instances in which moral costs strengthen the case for enacting legal rules and investing additional resources in enforcement because deterrence reduces the negative emotions experienced by noncompliers. We end by exploring the implications of our framework for legal policy across “guilt cultures” and “shame cultures,” for the debate over shaming sanctions, and for other moral emotions such as resentment and virtue.

University of Chicago Law Review (forthcoming), Yale Law & Economics Research Paper, Stanford Law and Economics Olin Working Paper No. 601, 

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Positive Incentives: The Income Effect and The Optimal Regulation of Crime

By W. Bentley Macleod and Roman Rivera

Abstract: Theories of crime in economics focus on the roles of deterrence and incapacitation in reducing criminal activity. In addition to deterrence, a growing body of empirical evidence has shown that both income support and employment subsidies can play a role in crime reduction. This paper extends the Becker-Ehrlich model to a standard labor supply model that includes the notion of a consumption need (Barzel and McDonald (1973)) highlights the role of substitution vs income effects when an individual chooses to engage in crime. Second, we show that whether the production of criminal activity is a substitute or a complement with the production of legitimate activity is central to the design of optimal policy. We find that both individual responsiveness to deterrence and optimal policy vary considerably with context, which is consistent with the large variation in the effect of deterrence on crime. Hence, optimal policy is a combination of deterrence, work subsidies and direct income transfers to the individual that vary with both income and location.

Cambridge, MA: National Bureau of Economic Research, 2024. 48p.

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