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Turning from Crime: A Dynamic Perspective

  • Robin C. Sickles
  • Jenny Williams

    (School of Economics, University of Adelaide)

This paper presents a dynamic model of criminal choice in which an offender's probability of arrest depends on his level of criminal activity as well as the actions of the criminal justice system. In addition, current choices affect future outcomes through a stock accumulation process. We introduce social capital stock into the preference structure to represent the flow of services associated with a good reputation and social acceptance. Social capital is used to account for the influence of social norms on the crime decision by assuming that the stigmatism associated with arrest depreciates an individual's social capital stock. Euler equations exclusive of the value function cannot be obtained from the first-order conditions of our dynamic model since the probability of arrest depends on the individual's own actions. This becomes an issue for estimation because the value function is not specified completely by parameterizing the utility function. We overcome this issue using a nested fixed-point algorithm within the estimation procedure to numerically approximate the value function.

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Paper provided by University of Adelaide, School of Economics in its series School of Economics Working Papers with number 1999-08.

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Length: 46 pages
Date of creation: 1999
Date of revision:
Publication status: Published in Journal of Econometrics, 2008, vol. 145, issues 1-2, pp. 158-173
Handle: RePEc:adl:wpaper:1999-08
Contact details of provider: Postal: Adelaide SA 5005
Phone: (618) 8303 5540
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  8. Rincón-Zapatero, Juan Pablo & Santos, Manuel S., 2009. "Differentiability of the value function without interiority assumptions," Journal of Economic Theory, Elsevier, vol. 144(5), pages 1948-1964, September.
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  18. Grogger, Jeffrey, 1995. "The Effect of Arrests on the Employment and Earnings of Young Men," The Quarterly Journal of Economics, MIT Press, vol. 110(1), pages 51-71, February.
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  23. Manuel S. Santos & Juan Pablo Rincon-Zapatero, 2007. "Moving the Goalposts: Differentiability of the Value Function without Interiority Assumptions," Working Papers 0614, University of Miami, Department of Economics.
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