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The Economics of Stigma: Why More Detection of Crime May Result in Less Stigmatization

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  • Alon Harel
  • Alon Klement

Abstract

This paper establishes that there may be an inverse relation between the rate of detection and the deterrent effects of stigma. The more people are detected and stigmatized, the less deterrence there may be. This conclusion is based on a search model in which the costs of searching for law-abiding partners increase with the rate of detection. The model distinguishes between willing stigmatizers, who refrain from business or social contacts with someone they believe has committed an offense (whether he is detected or not), and unwilling stigmatizers, whose main concern is not to be associated with the stigmatized yet are indifferent to whether that person has actually committed an offense. The inverse relation between the rate of detection and the deterrent effect of stigma is possible when the percentage of unwilling stigmatizers in the population is sufficiently high.

Suggested Citation

  • Alon Harel & Alon Klement, 2007. "The Economics of Stigma: Why More Detection of Crime May Result in Less Stigmatization," The Journal of Legal Studies, University of Chicago Press, vol. 36(2), pages 355-377, June.
    • Handle: RePEc:ucp:jlstud:v:36:y:2007:p:355-377
    DOI: 10.1086/511893
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    3. Edna Ullmann-Margalit, 2008. ""We the Big Brother" Or The Curious Incident of the Camera in the Kitchen," Discussion Paper Series dp480, The Federmann Center for the Study of Rationality, the Hebrew University, Jerusalem.
    4. Uri Weiss, 2015. "The Robber Wants To Be Punished," Discussion Paper Series dp685, The Federmann Center for the Study of Rationality, the Hebrew University, Jerusalem.
    5. Baumann, Florian & Friehe, Tim & Grechenig, Kristoffel, 2011. "A note on the optimality of (even more) incomplete strict liability," International Review of Law and Economics, Elsevier, vol. 31(2), pages 77-82, June.
    6. Hamamura, Jumpei & Kurita, Kenichi, 2021. "Does stigma against tax avoidance improve social welfare?," MPRA Paper 107173, University Library of Munich, Germany.
    7. Mungan, Murat C., 2016. "A generalized model for reputational sanctions and the (ir)relevance of the interactions between legal and reputational sanctions," International Review of Law and Economics, Elsevier, vol. 46(C), pages 86-92.
    8. Bruno Deffains & Claude Fluet, 2013. "Legal Liability when Individuals Have Moral Concerns," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 29(4), pages 930-955, August.
    9. Christoph Engel, 2010. "Turning the Lab into Jeremy Bentham’s Panopticon. A Lab Experiment on the Transparency of Punishment," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2010_06, Max Planck Institute for Research on Collective Goods, revised Jun 2018.
    10. Yuval Feldman & Orly Lobel, 2008. "Decentralized enforcement in organizations: An experimental approach," Regulation & Governance, John Wiley & Sons, vol. 2(2), pages 165-192, June.
    11. Edna Ullmann‐Margalit, 2008. "The case of the camera in the kitchen: Surveillance, privacy, sanctions, and governance," Regulation & Governance, John Wiley & Sons, vol. 2(4), pages 425-444, December.
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    14. Carbonara, Emanuela & Parisi, Francesco & von Wangenheim, Georg, 2012. "Unjust laws and illegal norms," International Review of Law and Economics, Elsevier, vol. 32(3), pages 285-299.
    15. Uriel Haran & Doron Teichman & Yuval Feldman, 2016. "Formal and Social Enforcement in Response to Individual Versus Corporate Transgressions," Journal of Empirical Legal Studies, John Wiley & Sons, vol. 13(4), pages 786-808, December.
    16. Taylor P. Stevenson & Robert D. Tollison & Dennis Pearson, 2012. "Efficacy of shaming penalties: Evidence from SEC football," Economics Bulletin, AccessEcon, vol. 32(2), pages 1162-1170.
    17. Bruno Deffains & Claude Fluet, 2007. "Legal versus Normative Incentives under Judicial Error," Cahiers de recherche 0718, CIRPEE.

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