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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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Handle: RePEc:nbr:nberwo:12641

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Cited by:
  1. María Laura Alzúa & Catherine Rodriguez & Edgar Villa, 2009. "The Quality of Life in Prisons: Do Educational Programs Reduce In-prison Conflicts?," CEDLAS, Working Papers 0091, CEDLAS, Universidad Nacional de La Plata.
  2. Rafael Di Tella & Juan Dubra, 2009. "Anger and Regulation," NBER Working Papers 15201, 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. 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.
  5. Pietro Vertova, 2011. "Prison Conditions and Recidivism," American Law and Economics Review, Oxford University Press, vol. 13(1), pages 103-130.
  6. Juan Dubra & Rafael Di Tella, 2011. "Free to Punish? The American Dream and the harsh Treatment of Criminals," Documentos de Trabajo/Working Papers 1105, Facultad de Ciencias Empresariales y Economia. Universidad de Montevideo..

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