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How Much Crime Reduction Does the Marginal Prisoner Buy?

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  • Rucker Johnson
  • Steven Raphael

Abstract

We estimate the effect of changes in incarceration rates on changes in crime rates using state-level panel data. We develop an instrument for future changes in incarceration rates based on the theoretically predicted dynamic adjustment path of the aggregate incarceration rate in response to a shock to prison entrance or exit transition probabilities. Given that incarceration rates adjust to permanent changes in behavior with a dynamic lag, one can identify variation in incarceration rates that is not contaminated by contemporary changes in criminal behavior. For the period 1978-2004, we find crime-prison elasticities that are considerably larger than those implied by ordinary least squares estimates. We also present results for two subperiods: 1978-90 and 1991-2004. Our instrumental variables estimates for the earlier period suggest relatively large crime-prison effects. For the later time period, however, the effects of changes in incarceration rates on crime rates are much smaller.

Suggested Citation

  • Rucker Johnson & Steven Raphael, 2012. "How Much Crime Reduction Does the Marginal Prisoner Buy?," Journal of Law and Economics, University of Chicago Press, vol. 55(2), pages 275-310.
  • Handle: RePEc:ucp:jlawec:doi:10.1086/664073
    DOI: 10.1086/664073
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    References listed on IDEAS

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    1. Kessler, Daniel P & Levitt, Steven D, 1999. "Using Sentence Enhancements to Distinguish between Deterrence and Incapacitation," Journal of Law and Economics, University of Chicago Press, vol. 42(1), pages 343-363, April.
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    6. David S. Lee & Justin McCrary, 2005. "Crime, Punishment, and Myopia," NBER Working Papers 11491, National Bureau of Economic Research, Inc.
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