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Turning from crime: A dynamic perspective

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  • Sickles, Robin C.
  • Williams, Jenny

Abstract

This paper presents a dynamic model of criminal choice in which an offender's probability of arrest depends on his level of criminal activity as well as the actions of the criminal justice system. In addition, current choices affect future outcomes through a stock accumulation process. We introduce social capital stock into the preference structure to represent the flow of services associated with a good reputation and social acceptance. Social capital is used to account for the influence of social norms on the crime decision by assuming that the stigmatism associated with arrest depreciates an individual's social capital stock. Euler equations exclusive of the value function cannot be obtained from the first-order conditions of our dynamic model since the probability of arrest depends on the individual's own actions. This becomes an issue for estimation because the value function is not specified completely by parameterizing the utility function. We overcome this issue using a nested fixed-point algorithm within the estimation procedure to numerically approximate the value function.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Econometrics.

Volume (Year): 145 (2008)
Issue (Month): 1-2 (July)
Pages: 158-173

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Handle: RePEc:eee:econom:v:145:y:2008:i:1-2:p:158-173

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Web page: http://www.elsevier.com/locate/jeconom

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References

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  1. Maasoumi, Esfandiar, 1989. "Continuously distributed attributes and measures of multivariate inequality," Journal of Econometrics, Elsevier, vol. 42(1), pages 131-144, September.
  2. Gallant, A. Ronald & Tauchen, George, 1996. "Which Moments to Match?," Econometric Theory, Cambridge University Press, vol. 12(04), pages 657-681, October.
  3. Manuel S. Santos & Juan Pablo Rincon-Zapatero, 2007. "Moving the Goalposts: Differentiability of the Value Function without Interiority Assumptions," Working Papers 0614, University of Miami, Department of Economics.
  4. Rincón-Zapatero, Juan Pablo & Santos, Manuel S., 2009. "Differentiability of the value function without interiority assumptions," Journal of Economic Theory, Elsevier, vol. 144(5), pages 1948-1964, September.
  5. Carrasco, Marine & Florens, Jean-Pierre, 2002. "Simulation-Based Method of Moments and Efficiency," Journal of Business & Economic Statistics, American Statistical Association, vol. 20(4), pages 482-92, October.
  6. Grogger, Jeff, 1998. "Market Wages and Youth Crime," Journal of Labor Economics, University of Chicago Press, vol. 16(4), pages 756-91, October.
  7. Kenneth Burdett & Ricardo Lagos & Randall Wright, 2002. "Crime, Inequality, and Unemployment, Second Version," PIER Working Paper Archive 03-029, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 01 Sep 2003.
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  12. Francis Vella, 1998. "Estimating Models with Sample Selection Bias: A Survey," Journal of Human Resources, University of Wisconsin Press, vol. 33(1), pages 127-169.
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  14. Lance Lochner, 2004. "Education, Work, And Crime: A Human Capital Approach," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 45(3), pages 811-843, 08.
  15. Huh, Keun & Sickles, Robin C, 1994. "Estimation of the Duration Model by Nonparametric Maximum Likelihood, Maximum Penalized Likelihood, and Probability Simulators," The Review of Economics and Statistics, MIT Press, vol. 76(4), pages 683-94, November.
  16. Lucas, Robert E, Jr, 1978. "Asset Prices in an Exchange Economy," Econometrica, Econometric Society, vol. 46(6), pages 1429-45, November.
  17. Grogger, Jeffrey, 1995. "The Effect of Arrests on the Employment and Earnings of Young Men," The Quarterly Journal of Economics, MIT Press, vol. 110(1), pages 51-71, February.
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Cited by:
  1. Anna Bonanno, 2006. "The economic analysis of offender’s choice: Old and new insights," International Review of Economics, Springer, vol. 53(2), pages 193-224, June.
  2. McCrary, Justin & Lee, David S., 2009. "The Deterrence Effect of Prison: Dynamic Theory and Evidence," Berkeley Olin Program in Law & Economics, Working Paper Series qt2gh1r30h, Berkeley Olin Program in Law & Economics.
  3. Darden, M, 2010. "Smoking, Expectations, and Health: A Dynamic Stochastic Model of Lifetime Smoking Behavior," Health, Econometrics and Data Group (HEDG) Working Papers 10/28, HEDG, c/o Department of Economics, University of York.
  4. Ignacio Munyo, . "The Juvenile Crime Dilemma," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics.
  5. Ann Dryden Witte & Robert Witt, 2001. "What We Spend and What We Get: Public and Private Provision of Crime Prevention," NBER Working Papers 8204, National Bureau of Economic Research, Inc.
  6. Antonio Merlo & Kenneth I. Wolpin, 2008. "The Transition from School to Jail: Youth Crime and High School Completion Among Black Males, Second Version," PIER Working Paper Archive 09-002, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 16 Jan 2009.
  7. Hope Corman & Kelly Noonan & Nancy E. Reichman & Ofira Schwartz-Soicher, 2006. "Crime and Circumstance: The Effects of Infant Health Shocks on Fathers’ Criminal Activity," Working Papers 913, Princeton University, Woodrow Wilson School of Public and International Affairs, Center for Research on Child Wellbeing..
  8. David S. Lee & Justin McCrary, 2009. "The Deterrence Effect of Prison: Dynamic Theory and Evidence," Working Papers 1168, Princeton University, Department of Economics, Center for Economic Policy Studies..
  9. Antonio Merlo & Kenneth I. Wolpin, 2008. "The Transition from School to Jail: Youth Crime and High School Completion Among Black Males," PIER Working Paper Archive 08-033, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
  10. Hope Corman & Kelly Noonan & Nancy Reichman & Ofira Schwartz-Soicher, 2011. "Life Shocks and Crime: A Test of the “Turning Point” Hypothesis," Demography, Springer, vol. 48(3), pages 1177-1202, August.

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