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Crime and Punishment in the "American Dream"

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  • Rafael Di Tella
  • Juan Dubra

Abstract

We observe that countries where belief in the "American dream" (i.e., effort pays) prevails also set harsher punishment for criminals. We know from previous work 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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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 12641.

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Date of creation: Oct 2006
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Publication status: published as 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:nbr:nberwo:12641

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Citations

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Cited by:
  1. Rafael Di Tella & Juan Dubra, 2011. "Free to Punish? The American Dream and the Harsh Treatment of Criminals," NBER Working Papers 17309, National Bureau of Economic Research, Inc.
  2. 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.
  3. 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).
  4. Di Tella, Rafael & Dubra, Juan, 2008. "Anger and Regulation," MPRA Paper 14442, University Library of Munich, Germany, revised 29 Mar 2009.
  5. Francesco Drago & Roberto Galbiati & Pietro Vertova, 2011. "Prison Conditions and Recidivism," American Law and Economics Review, Oxford University Press, vol. 13(1), pages 103-130.
  6. 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.

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