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The Becker Paradox and Type I vs. Type II Errors in the Economics of Crime

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Abstract
Two real-world observations are not easily replicated in models of crime. First, although capital punishment is optimal in Becker’s (1968) model, it is rarely observed in the real world. Second, criminal procedure and the evaluation of evidence vary across societies and historical periods, the standard of proof being sometimes very high and sometimes quite low. In this paper, we develop a general equilibrium model of judicial procedure allowing for innocent persons being convicted. We show that the median voter theorem applies to this model, making judicial procedure endogenous. So formulated, the model can replicate both empirical observations.

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  • Persson, Mats & Siven, Claes-Henric, 2006. "The Becker Paradox and Type I vs. Type II Errors in the Economics of Crime," Seminar Papers 741, Stockholm University, Institute for International Economic Studies.
    • Handle: RePEc:hhs:iiessp:0741
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    1. David Friedman, 1999. "Why Not Hang Them All: The Virtues of Inefficient Punishment," Journal of Political Economy, University of Chicago Press, vol. 107(S6), pages 259-269, December.
    2. Gary S. Becker, 1974. "Crime and Punishment: An Economic Approach," NBER Chapters, in: Essays in the Economics of Crime and Punishment, pages 1-54, National Bureau of Economic Research, Inc.
    3. Sah, Raaj K, 1991. "Social Osmosis and Patterns of Crime," Journal of Political Economy, University of Chicago Press, vol. 99(6), pages 1272-1295, December.
    4. Persson, Torsten & Tabellini, Guido, 1999. "Political economics and macroeconomic policy," Handbook of Macroeconomics, in: J. B. Taylor & M. Woodford (ed.), Handbook of Macroeconomics, edition 1, volume 1, chapter 22, pages 1397-1482, Elsevier.
    5. Kenneth Burdett & Ricardo Lagos & Randall Wright, 2004. "An On-The-Job Search Model Of Crime, Inequality, And Unemployment," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 45(3), pages 681-706, August.
    6. Persson, Mats & Siven, Claes-Henric, 2006. "Incentive and incarceration effects in a general equilibrium model of crime," Journal of Economic Behavior & Organization, Elsevier, vol. 59(2), pages 214-229, February.
    7. Kaplow, Louis & Shavell, Steven, 1994. "Accuracy in the Determination of Liability," Journal of Law and Economics, University of Chicago Press, vol. 37(1), pages 1-15, April.
    8. George J. Stigler, 1974. "The Optimum Enforcement of Laws," NBER Chapters, in: Essays in the Economics of Crime and Punishment, pages 55-67, National Bureau of Economic Research, Inc.
    9. Kevin M. Murphy & Andrei Shleifer & Robert W. Vishny, 2008. "Why Is Rent-Seeking So Costly to Growth?," Springer Books, in: Roger D. Congleton & Kai A. Konrad & Arye L. Hillman (ed.), 40 Years of Research on Rent Seeking 2, pages 213-218, Springer.
    10. Kenneth Burdett & Ricardo Lagos & Randall Wright, 2003. "Crime, Inequality, and Unemployment," American Economic Review, American Economic Association, vol. 93(5), pages 1764-1777, December.
    11. Chien-Chieh Huang & Derek Laing & Ping Wang, 2004. "Crime And Poverty: A Search-Theoretic Approach," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 45(3), pages 909-938, August.
    12. Paul F. Whiteley (ed.), 1998. "Economic Policy," Books, Edward Elgar Publishing, volume 0, number 996.
    13. Png, I. P. L., 1986. "Optimal subsidies and damages in the presence of judicial error," International Review of Law and Economics, Elsevier, vol. 6(1), pages 101-105, June.
    14. Jesper Roine, 2006. "The political economics of not paying taxes," Public Choice, Springer, vol. 126(1), pages 107-134, January.
    15. Harris, John R, 1970. "On the Economics of Law and Order," Journal of Political Economy, University of Chicago Press, vol. 78(1), pages 165-174, Jan.-Feb..
    16. James Andreoni, 1991. "Reasonable Doubt and the Optimal Magnitude of Fines: Should the Penalty Fit the Crime?," RAND Journal of Economics, The RAND Corporation, vol. 22(3), pages 385-395, Autumn.
    17. Barry Nalebuff & David Scharfstein, 1987. "Testing in Models of Asymmetric Information," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 54(2), pages 265-277.
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    Cited by:

    1. Supanika Leurcharusmee, 2012. "Is penalty for academic cheating an incredible threat?," The Empirical Econometrics and Quantitative Economics Letters, Faculty of Economics, Chiang Mai University, vol. 1(2), pages 81-96, June.

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    More about this item

    Keywords

    Criminal law; Judicial error; Burden of proof;
    All these keywords.

    JEL classification:

    • K40 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - General

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