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Economics of the Broken Window Theory

Author

Listed:
  • Berg Nathan

    (University of Otago, Dunedin, New Zealand)

  • Kim Jeong-Yoo

    (Kyung Hee University, Department of Economics, 1 Hoegidong, Dongdaemunku, Seoul 130-701, Korea, Phone: +822-961-0986)

Abstract

In this paper, we argue that there is strategic complementarity in criminal behavior. Strategic complementarity arises because the apprehension probability that affects the crime rate depends on the crime rate itself. The natural consequence is the possible multiplicity of the equilibrium crime rate. The actual crime rate is realized by the self-fulfilling nature of the crime rate. Our analysis provides an economic rationalization of the broken window theory as the result of strategic complementarity and self-fulfilling crime rates. Regardless of how effective polices prescribed by the broken window theory are (e.g. removing graffiti, reducing trash in the street, and repairing broken windows), our model demonstrates the theory’s important contribution of introducing to the economics of crime the idea of belief-based deterrence. We also show that the equilibrium crime rate is stable whenever the broken window policy targets the lowest among multiple equilibrium crime rates.

Suggested Citation

  • Berg Nathan & Kim Jeong-Yoo, 2019. "Economics of the Broken Window Theory," Asian Journal of Law and Economics, De Gruyter, vol. 10(3), pages 1-9, December.
    • Handle: RePEc:bpj:ajlecn:v:10:y:2019:i:3:p:9:n:3
    DOI: 10.1515/ajle-2019-0026
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    References listed on IDEAS

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    1. Jeong-Yoo Kim, 2013. "A note on the non-maximality of the optimal fines when the apprehension probability depends on the offense rate," European Journal of Law and Economics, Springer, vol. 36(1), pages 131-138, August.
    2. Ferrer, Rosa, 2010. "Breaking the law when others do: A model of law enforcement with neighborhood externalities," European Economic Review, Elsevier, vol. 54(2), pages 163-180, February.
    3. Gary S. Becker, 1974. "Crime and Punishment: An Economic Approach," NBER Chapters, in: Essays in the Economics of Crime and Punishment, pages 1-54, National Bureau of Economic Research, Inc.
    4. Bar-Gill, Oren & Harel, Alon, 2001. "Crime Rates and Expected Sanctions: The Economics of Deterrence Revisited," The Journal of Legal Studies, University of Chicago Press, vol. 30(2), pages 485-501, Part I Ju.
    5. Corman, Hope & Mocan, Naci, 2005. "Carrots, Sticks, and Broken Windows," Journal of Law and Economics, University of Chicago Press, vol. 48(1), pages 235-266, April.
    6. Lui, Francis T., 1986. "A dynamic model of corruption deterrence," Journal of Public Economics, Elsevier, vol. 31(2), pages 215-236, November.
    7. Ehrlich, Isaac, 1973. "Participation in Illegitimate Activities: A Theoretical and Empirical Investigation," Journal of Political Economy, University of Chicago Press, vol. 81(3), pages 521-565, May-June.
    8. Nathan Berg & Jeong-Yoo Kim, 2015. "Quantity Restrictions with Imperfect Enforcement in an Overused Commons: Permissive Regulation to Reduce Overuse?," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 171(2), pages 308-329, June.
    9. Polinsky, Mitchell & Shavell, Steven, 1979. "The Optimal Tradeoff between the Probability and Magnitude of Fines," American Economic Review, American Economic Association, vol. 69(5), pages 880-891, December.
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    Cited by:

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    More about this item

    Keywords

    broken window theory; crime deterrence; law enforcement; self-fulfilling crime rate; strategic complementarity;
    All these keywords.

    JEL classification:

    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

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