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Crime and punishment in the "American Dream"

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  • Di Tella, Rafael
  • Dubra, Juan
Abstract
We observe that countries where belief in the "American dream"(i.e., effort pays) prevails also set harsher punishment for criminals. We know that beliefs are also correlated with several features of the economic system (taxation, social insurance, etc). Our objective is to study the joint determination of these three features (beliefs, punitiveness and economic system) in a way that replicates the observed empirical patterns. We present a model where beliefs determine the types of contracts that firms offer and whether workers exert effort. Some workers become criminals, depending on their luck in the labor market, the expected punishment, and an individual shock that we call "meanness". It is this meanness level that a penal system based on "retribution" tries to detect when deciding the severity of the punishment. We find that when initial beliefs differ, two equilibria can emerge out of identical fundamentals. In the "American" (as opposed to the "French") equilibrium, belief in the "American dream" is commonplace, workers exert effort, there are high powered contracts (and income is unequally distributed) and punishments are harsh. Economists who believe that deterrence (rather than retribution) shapes punishment can interpret the meanness parameter as pessimism about future economic opportunities and verify that two similar equilibria emerge.

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  • Di Tella, Rafael & Dubra, Juan, 2008. "Crime and punishment in the "American Dream"," Journal of Public Economics, Elsevier, vol. 92(7), pages 1564-1584, July.
    • Handle: RePEc:eee:pubeco:v:92:y:2008:i:7:p:1564-1584
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. La Reversión de las desgracias: El crimen en EE.UU. versus Europa
      by Sebastian Galiani y Laura Jaitman in Foco Económico on 2015-03-02 03:45:37

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    Cited by:

    1. María Laura Alzúa & Catherine Rodriguez & Edgar Villa, 2010. "The Quality of Life in Prisons: Do Educational Programs Reduce In-Prison Conflicts?," NBER Chapters, in: The Economics of Crime: Lessons For and From Latin America, pages 239-264, National Bureau of Economic Research, Inc.
    2. Ulrich Krotz, 2008. "The (Beginning of the) End of the Political Unity of the West? Four Scenarios of North Atlantic Futures," EUI-RSCAS Working Papers 31, European University Institute (EUI), Robert Schuman Centre of Advanced Studies (RSCAS).
    3. Rafael Di Tella & Ernesto Schargrodsky, 2013. "Criminal Recidivism after Prison and Electronic Monitoring," Journal of Political Economy, University of Chicago Press, vol. 121(1), pages 28-73.
    4. Rafael Tella & Juan Dubra, 2014. "Anger and Regulation," Scandinavian Journal of Economics, Wiley Blackwell, vol. 116(3), pages 734-765, July.
    5. Juan Dubra & Rafael Di Tella, 2011. "Free to Punish? The American Dream and the harsh Treatment of Criminals," Documentos de Trabajo/Working Papers 1105, Facultad de Ciencias Empresariales y Economia. Universidad de Montevideo..
    6. Francesco Drago & Roberto Galbiati & Pietro Vertova, 2011. "Prison Conditions and Recidivism," American Law and Economics Review, American Law and Economics Association, vol. 13(1), pages 103-130.
    7. Rafael Di Tella, 2010. "Comment on "Does Arrest Deter Violence? Comparing Experimental and Nonexperimental Evidence on Mandatory Arrest Laws"," NBER Chapters, in: The Economics of Crime: Lessons For and From Latin America, pages 453-456, National Bureau of Economic Research, Inc.
    8. Julio J. Rotemberg, 2017. "Group Learning, Wage Dispersion and Non-stationary Offers," Economica, London School of Economics and Political Science, vol. 84(335), pages 365-392, July.
    9. Rafael di Tella & Ernesto Schargrodsky, 2009. "Happiness, Ideology and Crime in Argentine Cities," Research Department Publications 4645, Inter-American Development Bank, Research Department.
    10. Rafael Di Tella & Juan Dubra & Robert MacCulloch, 2008. "A Resource Belief-Curse? Oil and Individualism," NBER Working Papers 14556, National Bureau of Economic Research, Inc.
    11. Gustavo Adolfo Caballero Orozco, 2016. "Luck and Effort: Learning about Income from Friends and Neighbors," 2016 Papers pca706, Job Market Papers.

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    JEL classification:

    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • K14 - Law and Economics - - Basic Areas of Law - - - Criminal Law
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State

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