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The Risks and Rewards of Criminal Activity: A Comprehensive Test of Criminal Deterrence

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  • Viscusi, W Kip

Abstract

Whereas previous analyses of criminal deterrence have focused on the effect of criminal enforcement on crime rates, this study analyzes the existence of compensating differentials for criminal pursuits. Analyzing the risk-rewards trade-off, this approach represents a more comprehensive test of the criminal deterrence hypothesis. The sample consisted of black inner-city youths who reported their participation, income, and self-assessed risks from crime. The risk premiums for the three principal adverse outcomes (arrest, conviction, and prison) constituted between one- half and two-thirds of all crime income on the average, providing strong support for the criminal deterrence hypothesis. Copyright 1986 by University of Chicago Press.

Suggested Citation

  • Viscusi, W Kip, 1986. "The Risks and Rewards of Criminal Activity: A Comprehensive Test of Criminal Deterrence," Journal of Labor Economics, University of Chicago Press, vol. 4(3), pages 317-340, July.
  • Handle: RePEc:ucp:jlabec:v:4:y:1986:i:3:p:317-40
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    Cited by:

    1. Pacula Rosalie Liccardo & Kilmer Beau & Grossman Michael & Chaloupka Frank J, 2010. "Risks and Prices: The Role of User Sanctions in Marijuana Markets," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(1), pages 1-38, February.
    2. Raphael, Steven & Winter-Ember, Rudolf, 2001. "Identifying the Effect of Unemployment on Crime," Journal of Law and Economics, University of Chicago Press, vol. 44(1), pages 259-283, April.
    3. Eide, Erling & Rubin, Paul H. & Shepherd, Joanna M., 2006. "Economics of Crime," Foundations and Trends(R) in Microeconomics, now publishers, vol. 2(3), pages 205-279, December.
    4. Isaac Ehrlich, 2010. "The Market Model of Crime: A Short Review and New Directions," Chapters,in: Handbook on the Economics of Crime, chapter 1 Edward Elgar Publishing.
    5. Gregory DeAngelo & Gary Charness, 2012. "Deterrence, expected cost, uncertainty and voting: Experimental evidence," Journal of Risk and Uncertainty, Springer, vol. 44(1), pages 73-100, February.
    6. Giovanni Mastrobuoni, 2011. "Optimal Criminal Behavior and the Disutility of Jail: Theory and Evidence On Bank Robberies," Carlo Alberto Notebooks 220, Collegio Carlo Alberto.
    7. Horst Entorf & Hannes Spengler, 2005. "Ökonometrie der Kriminalität," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 58(16), pages 13-25, August.
    8. Éric Langlais, 2010. "Les criminels aiment-ils le risque ?," Revue économique, Presses de Sciences-Po, vol. 61(2), pages 263-280.
    9. Gathmann, Christina, 2004. "The Effects of Enforcement on Illegal Markets: Evidence from Migrant Smuggling along the Southwestern Border," IZA Discussion Papers 1004, Institute for the Study of Labor (IZA).
    10. Lance Lochner, 2001. "A Theoretical and Empirical Study of Individual Perceptions of the Criminal Justice System," RCER Working Papers 483, University of Rochester - Center for Economic Research (RCER).
    11. Williams, Geoffrey Fain, 2015. "Property crime: Investigating career patterns and earnings," Journal of Economic Behavior & Organization, Elsevier, vol. 119(C), pages 124-138.
    12. Berrebi Claude, 2007. "Evidence about the Link Between Education, Poverty and Terrorism among Palestinians," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 13(1), pages 1-38, December.
    13. Spengler, Hannes, 2005. "Eine panelökonometrische Überprüfung der ökonomischen Theorie der Kriminalität mit deutschen Bundesländerdaten," Darmstadt Discussion Papers in Economics 150, Darmstadt University of Technology, Department of Law and Economics.
    14. Isaac Ehrlich, 1996. "Crime, Punishment, and the Market for Offenses," Journal of Economic Perspectives, American Economic Association, vol. 10(1), pages 43-67, Winter.
    15. Draca, Mirko & Koutmeridis, Theodore & Machin, Stephen, 2015. "The Changing Returns to Crime: Do Criminals Respond to Prices?," IZA Discussion Papers 9109, Institute for the Study of Labor (IZA).
    16. Erling Eide, 1997. "The Economics of Crime: Main Problems and Some Solutions," Nordic Journal of Political Economy, Nordic Journal of Political Economy, vol. 24, pages 65-77.
    17. Jonathan Klick & Alexander Tabarrok, 2010. "Police, Prisons, and Punishment: The Empirical Evidence on Crime Deterrence," Chapters,in: Handbook on the Economics of Crime, chapter 6 Edward Elgar Publishing.
    18. Lawrence Southwick, 2005. "Economies of scale and market power in policing," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 26(8), pages 461-473.
    19. Gordana Lalović & Saule Amirebayeva Reardon & Irena Vida & James Reardon, 2012. "Consumer decision model of intelectual property theft in emerging markets," Organizations and Markets in Emerging Economies, Faculty of Economics, Vilnius University, vol. 3(1).
    20. Lance Lochner, 2007. "Individual Perceptions of the Criminal Justice System," American Economic Review, American Economic Association, vol. 97(1), pages 444-460, March.
    21. McCrary, Justin & Lee, David S., 2009. "The Deterrence Effect of Prison: Dynamic Theory and Evidence," Berkeley Olin Program in Law & Economics, Working Paper Series qt2gh1r30h, Berkeley Olin Program in Law & Economics.
    22. Hannes Spengler, 2006. "Eine panelökonometrische Überprüfung der ökonomischen Theorie der Kriminalität mit deutschen Bundesländerdaten," Discussion Papers of DIW Berlin 548, DIW Berlin, German Institute for Economic Research.
    23. Justin McCrary, 2010. "Dynamic Perspectives on Crime," Chapters,in: Handbook on the Economics of Crime, chapter 4 Edward Elgar Publishing.
    24. Eisenstein, Eric M., 2008. "Identity theft: An exploratory study with implications for marketers," Journal of Business Research, Elsevier, vol. 61(11), pages 1160-1172, November.

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