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Deterrence and avoidance

  • Nussim, Jacob
  • Tabbach, Avraham D.
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    This paper explores the effects of public enforcement, in general, and punishment, in particular, on crime levels if offenders can engage in avoidance activities. Avoidance reduces the probability or magnitude of punishment. In general, offenders can reduce their expected punishment either by substituting legal activities for criminal activities (the deterrence effect) or by increasing avoidance activities. This paper shows that increasing the direct costs of crime - by either increasing punishment or enforcement efforts - does not necessarily deter criminal activity and may actually trigger increased crime if avoidance is possible. Furthermore, this paper shows that increasing the opportunity costs of crime (e.g. by subsidizing legal alternatives or through educational and vocational programs) reduces both crime and avoidance and thus, in this respect, is advantageous. The conditions for these outcomes are identified, the economic mechanisms are explained, and an underlying intuitive approach for these results is proposed.

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    Article provided by Elsevier in its journal International Review of Law and Economics.

    Volume (Year): 29 (2009)
    Issue (Month): 4 (December)
    Pages: 314-323

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    Handle: RePEc:eee:irlaec:v:29:y:2009:i:4:p:314-323
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    1. Jacob Nussim & Avraham Tabbach, 2008. "(Non)Regulable avoidance and the perils of punishment," European Journal of Law and Economics, Springer, vol. 25(3), pages 191-208, June.
    2. 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.
    3. Ralph C Bayer & Matthias Sutter, 2004. "The excess burden of tax evasion - An experimental detection- concealment contest," Experimental 0412003, EconWPA.
    4. Ehrlich, Isaac, 1973. "Participation in Illegitimate Activities: A Theoretical and Empirical Investigation," Journal of Political Economy, University of Chicago Press, vol. 81(3), pages 521-65, May-June.
    5. Block, M K & Heineke, J M, 1975. "A Labor Theoretic Analysis of the Criminal Choice," American Economic Review, American Economic Association, vol. 65(3), pages 314-25, June.
    6. Alm, James & Jackson, Betty & McKee, Michael J., 1992. "Estimating the Determinants of Taxpayer Compliance with Experimental Data," National Tax Journal, National Tax Association, vol. 45(1), pages 107-14, March.
    7. Arun S. Malik, 1990. "Avoidance, Screening and Optimum Enforcement," RAND Journal of Economics, The RAND Corporation, vol. 21(3), pages 341-353, Autumn.
    8. Pommerehne, Werner W. & Frey, Bruno S., 1992. "The effects of tax administration on tax morale," Discussion Papers, Series II 191, University of Konstanz, Collaborative Research Centre (SFB) 178 "Internationalization of the Economy".
    9. Ehrlich, Isaac, 1981. "On the Usefulness of Controlling Individuals: An Economic Analysis of Rehabilitation, Incapacitation, and Deterrence," American Economic Review, American Economic Association, vol. 71(3), pages 307-22, June.
    10. George J. Stigler, 1974. "The Optimum Enforcement of Laws," NBER Chapters, in: Essays in the Economics of Crime and Punishment, pages 55-67 National Bureau of Economic Research, Inc.
    11. Steven Shavell, 1989. "Specific Versus General Enforcement of Law," NBER Working Papers 3062, National Bureau of Economic Research, Inc.
    12. Tabbach Avraham D & Nussim Jacob, 2008. "Controlling Avoidance: Ex Ante Regulation Versus Ex Post Punishment," Review of Law & Economics, De Gruyter, vol. 4(1), pages 45-63, March.
    13. Pommerehne, Werner W & Weck-Hannemann, Hannelore, 1996. "Tax Rates, Tax Administration and Income Tax Evasion in Switzerland," Public Choice, Springer, vol. 88(1-2), pages 161-70, July.
    14. Timothy Stanley, 1995. "Optimal Penalties for Concealment of Crime," Law and Economics 9507001, EconWPA, revised 27 Dec 1995.
    15. Innes, Robert, 2001. "Violator Avoidance Activities and Self-Reporting in Optimal Law Enforcement," Journal of Law, Economics and Organization, Oxford University Press, vol. 17(1), pages 239-56, April.
    16. Kahan, Dan M & Posner, Eric A, 1999. "Shaming White-Collar Criminals: A Proposal for Reform of the Federal Sentencing Guidelines," Journal of Law and Economics, University of Chicago Press, vol. 42(1), pages 365-91, April.
    17. Ehrlich, Isaac & Becker, Gary S, 1972. "Market Insurance, Self-Insurance, and Self-Protection," Journal of Political Economy, University of Chicago Press, vol. 80(4), pages 623-48, July-Aug..
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