Economics v. Criminology: Cost Effectiveness of Punishment

Jun 26, 2020

Criminology is a result of inception between Law and Economics. The model can be used to predict how the changes in probability and severity of sanctions can have effect on the commission of crime, considering the individual preferences stay constant. 

Insight to Rational Choice Model

The works of Gary Becker was instilled with the economic theory of criminal behaviour and its genesis. What it explained was a simple theory which states “the profits of the crime is the inherent force which urges man to delinquency: the pain of punishment is a force which restrains them however if the first force is greater, then the crime is committed and if second force is greater in magnitude then the crime will not be committed”.

A common generalisation derived from the people explains that, despite the change in punishment, it is the change in probability which has a greater effect. The technique followed here is the economist’s accustomed analysis of choice and assumes that a person commits an offence if the expected utility derived from the act exceeds the utility he could get by investing in his time and resources. Hence, some people become criminals not because of the fact that there is a difference in basic motivation which is formulated, but because their benefits and cost differs explicitly. 

Weighing out Costs and Benefits from Crime

It can be inferred that the model of criminal behaviour presumes, that in order to commit a crime the individual either consciously or subconsciously undertakes the process of Cost-benefit analysis. People are presumed to allocate themselves in a situation where benefit equals costs in order to commit crime. Depending on the individuals and the crime the gains derived from the criminal act varies. Some are financial gains such as gains from the offence of theft etc. others are mental satisfaction such as thrill of danger or “pure” contentment of wants, evidently the mental gains derived will be distinct for different people. The costs of crime are also contingent on the crime and individual. The costs are inclusive of opportunity costs, expected punishment costs which are constituted by formal and informal sanctions.

The formal costs include the cost of fine as a means of punishment whereas the informal sanctions include the associated social stigma attached with it as mode of conviction, arrest brings to the offender a feeling of extermination through the family members, relatives and also accompanied with it is a reduced income which the criminal transpires after having his name in criminal records. 

Uncertainty or Severity

To achieve the optimal level of deterrence, various policy instruments can influence law enforcement: the probability of punishments, gauging fines and term of imprisonment. It is the certainty of punishment which the economic model of law enforcement envisages in probability of punishment. In contrast, the duration of punishment, level of fine imposition, which law enforcement can also impact, attracts severity of punishment. A criminal’s expected penalty is the spin-off of the certainty of punishments and severity of punishments in deciding to commit a crime. 

If potential offenders are in a state of constrained wealth the combinations of severity and uncertainty will produce similar results of deterrence. Although it should be taken into account that the critical sanctions are inexpensive for the society to implement because incremental monetary fines does not lead to additional cost it only adds to revenue of the society. Thus a high fine/ low probability will attend the same deterrent effect as that of low fine/ high probability combination with a low cost to society. In contrast to fines, increasing seriousness of punishments obtrude the significant cost of running a prison to the society, so only serious and heinous offenders need to be imprisoned. Although longer prison sentences increase enforcement costs, very few individuals are imprisoned, significantly reducing enforcement costs.

Thus, it can be deduced that irrespective of the form of sanction, the fundamental economic model of law enforcement to achieve deterrence in terms of low cost to the society is the combination of high severity and low certainty.