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Crime and Punishment Re-Awakened – Insights on a Risky Business from the Worker's Perspective


  • Nuno Garoupa
  • Ana Paula Martins


This research inspects the general implications of considering duration of confinement as a deduction to the convicted consumer-worker time endowment. Even if analytically simple, the model is able to shed some light on the expected wage profile of criminals, and the pattern of their preferences. The methodology used relies on the analysis of the crime-deterrent composite scheme, establishing the relation between required fines, duration of imprisonment, the monetary size of the offence, arrest probabilities and individual preferences and endowments. The main conclusions stem from the fact, proven below, that dissuasive seclusion or fines may decrease with the individuals' wage rate under a much wider range of consumer preferences than with non-labor earnings – for crimes for which seclusion length is high relative to fines. The intuition behind such conclusion lies on the fact that the money value of the opportunity costs of imprisonment is proportionally indexed to the individual's wage rate. Sensitivity of the deterrent sanction to uncertainty in the endowments distribution, as well as of dispersion in the sanction itself, was also inspected. It was found dependent on the pattern of individual preferences, particularly on how the response to a risk behaves in the presence of others. Corresponding risk measures were applied.

Suggested Citation

  • Nuno Garoupa & Ana Paula Martins, 2002. "Crime and Punishment Re-Awakened – Insights on a Risky Business from the Worker's Perspective," EERI Research Paper Series EERI_RP_2002_07, Economics and Econometrics Research Institute (EERI), Brussels.
  • Handle: RePEc:eei:rpaper:eeri_rp_2002_07

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    Risk and Uncertainty and Labor Supply; Criminal Behavior; Illegal Behavior; Crime Deterrence; Risk Aversion; Multivariate Risks.;

    JEL classification:

    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making


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