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Turning from Crime: A Dynamic Perspective

Author

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  • Robin C. Sickles
  • Jenny Williams

    (School of Economics, University of Adelaide)

Abstract

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.

Suggested Citation

  • Robin C. Sickles & Jenny Williams, 1999. "Turning from Crime: A Dynamic Perspective," School of Economics and Public Policy Working Papers 1999-08, University of Adelaide, School of Economics and Public Policy.
    • Handle: RePEc:adl:wpaper:1999-08
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    File URL: https://media.adelaide.edu.au/economics/papers/doc/wp1999-08.pdf
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    3. Antonio Merlo & Kenneth I. Wolpin, 2008. "The Transition from School to Jail: Youth Crime and High School Completion Among Black Males, Second Version," PIER Working Paper Archive 09-002, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 16 Jan 2009.
    4. David S. Lee & Justin McCrary, 2009. "The Deterrence Effect of Prison: Dynamic Theory and Evidence," Working Papers 1171, Princeton University, Department of Economics, Industrial Relations Section..
    5. Chao Fu & Nicolás Grau & Jorge Rivera, 2022. "Wandering astray: Teenagers' choices of schooling and crime," Quantitative Economics, Econometric Society, vol. 13(2), pages 387-424, May.
    6. Michael Darden, 2017. "Smoking, Expectations, and Health: A Dynamic Stochastic Model of Lifetime Smoking Behavior," Journal of Political Economy, University of Chicago Press, vol. 125(5), pages 1465-1522.
    7. David S. Lee & Justin McCrary, 2009. "The Deterrence Effect of Prison: Dynamic Theory and Evidence," Working Papers 1168, Princeton University, Department of Economics, Center for Economic Policy Studies..
    8. Merlo, Antonio & Wolpin, Kenneth I., 2015. "The transition from school to jail: Youth crime and high school completion among black males," European Economic Review, Elsevier, vol. 79(C), pages 234-251.
    9. Ann Dryden Witte & Robert Witt, 2001. "What We Spend and What We Get: Public and Private Provision of Crime Prevention," NBER Working Papers 8204, National Bureau of Economic Research, Inc.
    10. repec:pri:cepsud:189lee is not listed on IDEAS
    11. M. Antonella Mancino, 2022. "A Search Model Of Early Employment Careers And Youth Crime," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 63(1), pages 329-390, February.
    12. Catania, Leopoldo & Di Mari, Roberto, 2021. "Hierarchical Markov-switching models for multivariate integer-valued time-series," Journal of Econometrics, Elsevier, vol. 221(1), pages 118-137.
    13. Ignacio Munyo, 2015. "The Juvenile Crime Dilemma," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 18(2), pages 201-211, April.
    14. Hope Corman & Kelly Noonan & Nancy E. Reichman & Ofira Schwartz-Soicher, 2006. "Crime and Circumstance: The Effects of Infant Health Shocks on Fathers' Criminal Activity," Working Papers 913, Princeton University, School of Public and International Affairs, Center for Research on Child Wellbeing..
    15. Kausik Chaudhuri & Payel Chowdhury & Subal Kumbhakar, 2015. "Crime in India: specification and estimation of violent crime index," Journal of Productivity Analysis, Springer, vol. 43(1), pages 13-28, February.
    16. 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.
    17. Robin Sickles & Peter Hartley, 2001. "A Model of Optimal Dynamic Oil Extraction: Evidence From a Large Middle Eastern Field," Journal of Productivity Analysis, Springer, vol. 15(1), pages 59-71, January.
    18. Anna Bonanno, 2006. "The economic analysis of offender’s choice: Old and new insights," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 53(2), pages 193-224, June.
    19. David S. Lee & Justin McCrary, 2009. "The Deterrence Effect of Prison: Dynamic Theory and Evidence," Working Papers 1168, Princeton University, Department of Economics, Center for Economic Policy Studies..
    20. Maennig, Wolfgang & Wilhelm, Stefan, 2023. "News and noise in crime politics: The role of announcements and risk attitudes," Economic Modelling, Elsevier, vol. 129(C).
    21. Hope Corman & Kelly Noonan & Nancy Reichman & Ofira Schwartz-Soicher, 2011. "Life Shocks and Crime: A Test of the “Turning Point” Hypothesis," Demography, Springer;Population Association of America (PAA), vol. 48(3), pages 1177-1202, August.
    22. David S. Lee & Justin McCrary, 2009. "The Deterrence Effect of Prison: Dynamic Theory and Evidence," Working Papers 1171, Princeton University, Department of Economics, Industrial Relations Section..
    23. Helen Tauchen, 2010. "Estimating the Supply of Crime: Recent Advances," Chapters, in: Bruce L. Benson & Paul R. Zimmerman (ed.), Handbook on the Economics of Crime, chapter 2, Edward Elgar Publishing.

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    More about this item

    Keywords

    social capital; dynamic model; panel data; value function approximation; simulated method of moments;
    All these keywords.

    JEL classification:

    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General
    • C3 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • K4 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior

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