IDEAS home Printed from https://ideas.repec.org/p/iza/izadps/dp9769.html
   My bibliography  Save this paper

Criminal Discount Factors and Deterrence

Author

Listed:
  • Mastrobuoni, Giovanni

    (Collegio Carlo Alberto)

  • Rivers, David A.

    (University of Western Ontario)

Abstract

The trade-off between the immediate returns from committing a crime and the future costs of punishment depends on an offender's time discounting. We exploit quasi-experimental variation in sentence length generated by a large collective pardon in Italy and provide non-parametric evidence on the extent of discounting from the raw data on recidivism and sentence length. Using a discrete-choice model of recidivism, we estimate an average annual discount factor of 0.74, although there is heterogeneity based on age, education, crime type, and nationality. Our estimates imply that the majority of deterrence is derived from the first few years in prison.

Suggested Citation

  • Mastrobuoni, Giovanni & Rivers, David A., 2016. "Criminal Discount Factors and Deterrence," IZA Discussion Papers 9769, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp9769
    as

    Download full text from publisher

    File URL: https://docs.iza.org/dp9769.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Matthias Sutter & Martin G. Kocher & Daniela Glätzle-Rützler & Stefan T. Trautmann, 2013. "Impatience and Uncertainty: Experimental Decisions Predict Adolescents' Field Behavior," American Economic Review, American Economic Association, vol. 103(1), pages 510-531, February.
    2. Akerlund, David & Golsteyn, Bart H.H. & Grönqvist, Hans & Lindahl, Lena, 2014. "Time Preferences and Criminal Behavior," IZA Discussion Papers 8168, Institute of Labor Economics (IZA).
    3. Glenn W. Harrison & Morten I. Lau & Melonie B. Williams, 2002. "Estimating Individual Discount Rates in Denmark: A Field Experiment," American Economic Review, American Economic Association, vol. 92(5), pages 1606-1617, December.
    4. Falk, A. & Becker, A. & Dohmen, T.J. & Enke, B. & Huffman, D. & Sunde, U., 2015. "The nature and predictive power of preferences: Global evidence," Research Memorandum 039, Maastricht University, Graduate School of Business and Economics (GSBE).
    5. Oded Galor & Ömer Özak, 2016. "The Agricultural Origins of Time Preference," American Economic Review, American Economic Association, vol. 106(10), pages 3064-3103, October.
    6. Milton Friedman, 1957. "Introduction to "A Theory of the Consumption Function"," NBER Chapters, in: A Theory of the Consumption Function, pages 1-6, National Bureau of Economic Research, Inc.
    7. repec:pri:cepsud:189lee is not listed on IDEAS
    8. Jerry A. Hausman, 1979. "Individual Discount Rates and the Purchase and Utilization of Energy-Using Durables," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 33-54, Spring.
    9. Lance Lochner & Enrico Moretti, 2004. "The Effect of Education on Crime: Evidence from Prison Inmates, Arrests, and Self-Reports," American Economic Review, American Economic Association, vol. 94(1), pages 155-189, March.
    10. Giovanni Mastrobuoni & Matthew Weinberg, 2009. "Heterogeneity in Intra-monthly Consumption Patterns, Self-Control, and Savings at Retirement," American Economic Journal: Economic Policy, American Economic Association, vol. 1(2), pages 163-189, August.
    11. Alessandro Barbarino & Giovanni Mastrobuoni, 2014. "The Incapacitation Effect of Incarceration: Evidence from Several Italian Collective Pardons," American Economic Journal: Economic Policy, American Economic Association, vol. 6(1), pages 1-37, February.
    12. Francesco Drago & Roberto Galbiati & Pietro Vertova, 2009. "The Deterrent Effects of Prison: Evidence from a Natural Experiment," Journal of Political Economy, University of Chicago Press, vol. 117(2), pages 257-280, April.
    13. Milton Friedman, 1957. "A Theory of the Consumption Function," NBER Books, National Bureau of Economic Research, Inc, number frie57-1, July.
    14. Mancino, Maria Antonella & Navarro, Salvador & Rivers, David A., 2016. "Separating state dependence, experience, and heterogeneity in a model of youth crime and education," Economics of Education Review, Elsevier, vol. 54(C), pages 274-305.
    15. Kaplow, Louis, 1990. "Optimal Deterrence, Uninformed Individuals, and Acquiring Information about Whether Acts Are Subject to Sanctions," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 6(1), pages 93-128, Spring.
    16. David S. Lee & Justin McCrary, 2009. "The Deterrence Effect of Prison: Dynamic Theory and Evidence," Working Papers 1171, Princeton University, Department of Economics, Industrial Relations Section..
    17. Heckman, James J. & Robb, Richard Jr., 1985. "Alternative methods for evaluating the impact of interventions : An overview," Journal of Econometrics, Elsevier, vol. 30(1-2), pages 239-267.
    18. Thomas Dohmen & Benjamin Enke & Armin Falk & David Huffman & Uwe Sunde, 2016. "Patience and the Wealth of Nations," Working Papers 2016-012, Human Capital and Economic Opportunity Working Group.
    19. David S. Lee & Justin McCrary, 2009. "The Deterrence Effect of Prison: Dynamic Theory and Evidence," Working Papers 1171, Princeton University, Department of Economics, Industrial Relations Section..
    20. M. Keith Chen, 2013. "The Effect of Language on Economic Behavior: Evidence from Savings Rates, Health Behaviors, and Retirement Assets," American Economic Review, American Economic Association, vol. 103(2), pages 690-731, April.
    21. 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.
    22. Saul Pleeter & John T. Warner, 2001. "The Personal Discount Rate: Evidence from Military Downsizing Programs," American Economic Review, American Economic Association, vol. 91(1), pages 33-53, March.
    23. 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..
    24. 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..
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. repec:hal:spmain:info:hdl:2441/12b1pd86do8s6p35b4jqn66t0p is not listed on IDEAS
    2. Victor H Aguiar & Nail Kashaev, 2021. "Stochastic Revealed Preferences with Measurement Error [Consistency between Household-level Consumption Data from Registers and Surveys]," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 88(4), pages 2042-2093.
    3. Basiglio Stefania & Foresta Alessandra & Turati Gilberto, 2021. "Impatience and crime. Evidence from the NLSY97," Working papers 073, Department of Economics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino.
    4. Andrew Leigh, 2020. "The Second Convict Age: Explaining the Return of Mass Imprisonment in Australia," The Economic Record, The Economic Society of Australia, vol. 96(313), pages 187-208, June.
    5. Thushyanthan Baskaran & Sonia Bhalotra & Brian Min & Yogesh Uppal, 2018. "Women legislators and economic performance," WIDER Working Paper Series wp-2018-47, World Institute for Development Economic Research (UNU-WIDER).
    6. Francesco Drago & Roberto Galbiati & Francesco Sobbrio, 2020. "The Political Cost of Being Soft on Crime: Evidence from a Natural Experiment," Journal of the European Economic Association, European Economic Association, vol. 18(6), pages 3305-3336.
    7. Francesco Drago & Roberto Galbiati & Francesco Sobbrio, 2020. "The Political Cost of Being Soft on Crime: Evidence from a Natural Experiment," Journal of the European Economic Association, European Economic Association, vol. 18(6), pages 3305-3336.
    8. Zanella, Giulio, 2020. "Prison Work and Convict Rehabilitation," IZA Discussion Papers 13446, Institute of Labor Economics (IZA).
    9. Mueller-Smith, Michael & Schnepel, Kevin T., 2016. "Avoiding Convictions: Regression Discontinuity Evidence on Court Deferrals for First-Time Drug Offenders," IZA Discussion Papers 10409, Institute of Labor Economics (IZA).
    10. Libor Dušek & Christian Traxler, 2024. "Swiftness and Delay of Punishment," CESifo Working Paper Series 10906, CESifo.
    11. Lia Q. Flores & Julian Jamison, 2023. "Predicting life outcomes with automatic thinking measures in a marginalized population," Economics Series Working Papers 1005, University of Oxford, Department of Economics.
    12. Schneider, Andreas, 2019. "Deterrence Theory in Paraguay: Exploring Fraud and Violation of Trust Cases," MPRA Paper 102204, University Library of Munich, Germany.
    13. Bruno Chiarini & Elisabetta Marzano, 2016. "Is the Severity of the Penalty an Effective Deterrent? A Strategic Approach for the Crime of Tax Evasion," CESifo Working Paper Series 6112, CESifo.
    14. Roee Sarel, 2022. "Crime and punishment in times of pandemics," European Journal of Law and Economics, Springer, vol. 54(2), pages 155-186, October.
    15. Mueller-Smith, Michael & Schnepel, Kevin T., 2016. "Avoiding Convictions: Regression Discontinuity Evidence on Court Deferrals for First-Time Drug Offenders," Working Papers 2016-16, University of Sydney, School of Economics.
    16. William Arbour & Guy Lacroix & Steeve Marchand, 2021. "Prison Rehabilitation Programs: Efficiency and Targeting," Working Papers tecipa-684, University of Toronto, Department of Economics.
    17. Giovanni Mastrobuoni & David A Rivers, 2019. "Optimising Criminal Behaviour and the Disutility of Prison," The Economic Journal, Royal Economic Society, vol. 129(619), pages 1364-1399.
    18. Campaniello, Nadia & Gavrilova, Evelina, 2018. "Uncovering the gender participation gap in crime," European Economic Review, Elsevier, vol. 109(C), pages 289-304.
    19. Steeve Marchand & Guy Lacroix & William Arbour, 2023. "Prison rehabilitation programs and recidivism: evidence from variations in availability," Melbourne Institute Working Paper Series wp2023n07, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    20. A. Mitchell Polinsky & Paul N. Riskind, 2017. "Deterrence and the Optimal Use of Prison, Parole, and Probation," NBER Working Papers 23436, National Bureau of Economic Research, Inc.
    21. Andreas Schneider, 2019. "Deterrence Theory in Paraguay: Exploring Fraud and Violation of Trust Cases," Social Sciences, MDPI, vol. 8(1), pages 1-17, January.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mastrobuoni, Giovanni & Rivers, David A., 2016. "Criminal Discount Factors and Deterrence," IZA Discussion Papers 9769, Institute for the Study of Labor (IZA).
    2. Ater, Itai & Givati, Yehonatan & Rigbi, Oren, 2014. "Organizational structure, police activity and crime," Journal of Public Economics, Elsevier, vol. 115(C), pages 62-71.
    3. Giovanni Mastrobuoni & Paolo Pinotti, 2015. "Legal Status and the Criminal Activity of Immigrants," American Economic Journal: Applied Economics, American Economic Association, vol. 7(2), pages 175-206, April.
    4. Jason M. Lindo & Charles Stoecker, 2014. "Drawn Into Violence: Evidence On “What Makes A Criminal” From The Vietnam Draft Lotteries," Economic Inquiry, Western Economic Association International, vol. 52(1), pages 239-258, January.
    5. Ana Maria Ibanez & Catherine Rodriguez & David Zarruk, 2013. "Crime, Punishment, and Schooling Decisions: Evidence from Colombian Adolescents," Research Department Publications IDB-WP-413, Inter-American Development Bank, Research Department.
    6. Gehrsitz, Markus, 2017. "Speeding, Punishment, and Recidivism: Evidence from a Regression Discontinuity Design," IZA Discussion Papers 10707, Institute of Labor Economics (IZA).
    7. O’Flaherty, Brendan & Sethi, Rajiv, 2015. "Urban Crime," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 1519-1621, Elsevier.
    8. Entorf, Horst, 2012. "Certainty and Severity of Sanctions in Classical and Behavioral Models of Deterrence: A Survey," IZA Discussion Papers 6516, Institute of Labor Economics (IZA).
    9. Laura Jaitman, 2019. "Frontiers in the economics of crime: lessons for Latin America and the Caribbean," Latin American Economic Review, Springer;Centro de Investigaciòn y Docencia Económica (CIDE), vol. 28(1), pages 1-36, December.
    10. Brian Bell & Anna Bindler & Stephen Machin, 2018. "Crime Scars: Recessions and the Making of Career Criminals," The Review of Economics and Statistics, MIT Press, vol. 100(3), pages 392-404, July.
    11. Benjamin Hansen, 2015. "Punishment and Deterrence: Evidence from Drunk Driving," American Economic Review, American Economic Association, vol. 105(4), pages 1581-1617, April.
    12. Koohi, Shiva, 2017. "College prospects and risky behavior among Mexican immigrant youth: The effects of in-state tuition policies on schooling and childbearing," Economics of Education Review, Elsevier, vol. 58(C), pages 162-174.
    13. Ana Maria Ibanez & Catherine Rodriguez & David Zarruk, 2013. "Crime, Punishment, and Schooling Decisions: Evidence from Colombian Adolescents," Research Department Publications IDB-WP-413, Inter-American Development Bank, Research Department.
    14. Beatty, Timothy K.M. & Blow, Laura & Crossley, Thomas F. & O'Dea, Cormac, 2014. "Cash by any other name? Evidence on labeling from the UK Winter Fuel Payment," Journal of Public Economics, Elsevier, vol. 118(C), pages 86-96.
    15. Vikram Maheshri & Giovanni Mastrobuoni, 2018. "Do Security Measures Displace Crime? Theory and Evidence from Italian Bank Robberies," Carlo Alberto Notebooks 579, Collegio Carlo Alberto.
    16. Bindler, Anna & Hjalmarsson, Randi, 2016. "The Fall of Capital Punishment and the Rise of Prisons: How Punishment Severity Affects Jury Verdicts," Working Papers in Economics 674, University of Gothenburg, Department of Economics.
    17. Lihui Zhang, 2016. "Are youth offenders responsive to changing sanctions? Evidence from the Canadian Youth Criminal Justice Act of 2003," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 49(2), pages 515-554, May.
    18. Entorf, Horst, 2012. "Expected recidivism among young offenders: Comparing specific deterrence under juvenile and adult criminal law," European Journal of Political Economy, Elsevier, vol. 28(4), pages 414-429.
    19. Giulia Lotti, 2022. "Tough on Young Offenders: Harmful or Helpful?," Journal of Human Resources, University of Wisconsin Press, vol. 57(4), pages 1276-1310.
    20. Entorf, Horst, 2011. "Turning 18: What a Difference Application of Adult Criminal Law Makes," IZA Discussion Papers 5434, Institute of Labor Economics (IZA).

    More about this item

    Keywords

    discounting; deterrence; collective pardon; recidivism;
    All these keywords.

    JEL classification:

    • D9 - Microeconomics - - Micro-Based Behavioral Economics
    • K4 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp9769. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Holger Hinte (email available below). General contact details of provider: https://edirc.repec.org/data/izaaade.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.