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Finders Keepers: Forfeiture Laws, Policing Incentives, and Local Budgets

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  • Katherine Baicker
  • Mireille Jacobson
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    Abstract

    In order to encourage anti-drug policing, both the federal government and many state governments have enacted laws that allow police agencies to keep a substantial fraction of assets that they seize in drug arrests. By adjusting their own allocations to police budgets, however, county governments can effectively undermine these incentives, capturing the additional resources for other uses. We use a rich new data set on police seizures and county spending to explore the reactions of both local governments and police to the complex incentives generated by these laws. We find that local governments do indeed offset the seizures that police make by reducing their other allocations to policing, undermining the statutory incentive created by the laws. They are more likely to do so in times of fiscal distress. Police, in turn, respond to the real net incentives for seizures, once local offsets are taken into account, not simply the incentives set out in statute. When de facto policies allow police to keep the assets they seize, they seize more. These findings have strong implications for the effectiveness of using financial incentives to solve agency problems in the provision of public goods in a federal system: agents respond to incentives, but so do intervening governments, and the effectiveness of federal and state laws in influencing agents' behavior is limited by the ability of local governments to divert funds to other uses.

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    File URL: http://www.nber.org/papers/w10484.pdf
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    Bibliographic Info

    Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 10484.

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    Date of creation: May 2004
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    Publication status: published as Baicker, Katherine and Mireille Jacobson. "Finders Keepers: Forfeiture Laws, Policing, and Local Budgets." Journal of Public Economics 91, 11 (December 2007): 2113-2136.
    Handle: RePEc:nbr:nberwo:10484

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    1. Mast, Brent D & Benson, Bruce L & Rasmussen, David W, 2000. " Entrepreneurial Police and Drug Enforcement Policy," Public Choice, Springer, vol. 104(3-4), pages 285-308, September.
    2. Steven D. Levitt, 1995. "Using Electoral Cycles in Police Hiring to Estimate the Effect of Policeon Crime," NBER Working Papers 4991, National Bureau of Economic Research, Inc.
    3. Katherine Baicker, 2001. "The Budgetary Repercussions of Capital Convictions," NBER Working Papers 8382, National Bureau of Economic Research, Inc.
    4. Roger H. Gordon & John D. Wilson, 1999. "Tax Structure and Government Behavior: Implications for Tax Policy," NBER Working Papers 7244, National Bureau of Economic Research, Inc.
    5. Justin McCrary, 2002. "Using Electoral Cycles in Police Hiring to Estimate the Effect of Police on Crime: Comment," American Economic Review, American Economic Association, vol. 92(4), pages 1236-1243, September.
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