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An Economic Assessment of Criminal Behaviour

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  • Cain Michael

    (School of Business, International University, Vietnam National University – HCMC, Linh Trung Ward, Thu Duc District, Ho Chi Minh City, Vietnam)

Abstract

A utility maximising framework for criminal behaviour is developed and a number of precise functional forms considered for the utility function of a representative criminal. The Kahneman–Tversky form seems to fit current empirical evidence, expressed mainly as the ratio of certain elasticities, better than some other candidates but a more general Markowitz function, centred at current wealth, is another possibility. The criminal’s optimal level of crime is obtained and comparative statics derived to help suggest how crime might be controlled. The solution involves an upper limit on the odds against detection of the criminal. Further empirical work is encouraged to ascertain if crime is a favourable bet and to elicit the utility function of a representative criminal in this analytical framework.

Suggested Citation

  • Cain Michael, 2016. "An Economic Assessment of Criminal Behaviour," Review of Law & Economics, De Gruyter, vol. 12(1), pages 77-94, March.
    • Handle: RePEc:bpj:rlecon:v:12:y:2016:i:1:p:77-94:n:1
    DOI: 10.1515/rle-2013-0045
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    References listed on IDEAS

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    1. Miceli Thomas J., 2012. "Deterred or Detained? A Unified Model of Criminal Punishment," Review of Law & Economics, De Gruyter, vol. 8(1), pages 1-20, March.
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    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. Grogger, Jeffrey, 1991. "Certainty vs. Severity of Punishment," Economic Inquiry, Western Economic Association International, vol. 29(2), pages 297-309, April.
    5. Daniel Kahneman & Amos Tversky, 2013. "Prospect Theory: An Analysis of Decision Under Risk," World Scientific Book Chapters, in: Leonard C MacLean & William T Ziemba (ed.), HANDBOOK OF THE FUNDAMENTALS OF FINANCIAL DECISION MAKING Part I, chapter 6, pages 99-127, World Scientific Publishing Co. Pte. Ltd..
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    9. Harry Markowitz, 1952. "The Utility of Wealth," Journal of Political Economy, University of Chicago Press, vol. 60(2), pages 151-151.
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    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General

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