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Crime and Education in a Model of Information Transmission

Author

Listed:
  • Darwin Cortés

    (Universidad del Rosario)

  • Guido Friebel

    (Goethe-Universität)

  • Darío Maldonado

    (Universidad del Rosario)

Abstract

We model the decisions of young individuals to stay in school or drop-out and engage in criminal activities. We build on the literature on human capital and crime engagement and use the framework of Banerjee (1993) that assumes that the information needed to engage in crime arrives in the form of a rumor and that individuals update their beliefs about the profitability of crime relative to education. These assumptions allow us to study the effect of social interactions on crime. We first show that a society with fully rational students is less vulnerable to crime than an otherwise identical society with boundedly rational students. We also investigate the spillovers from the actions of talented students to less talented students and show that policies that decrease the cost of education for talented students may increase the vulnerability of less talented students to crime. This is always the case when the heterogeneity of students with respect to talent is sufficiently small.

Suggested Citation

  • Darwin Cortés & Guido Friebel & Darío Maldonado, 2010. "Crime and Education in a Model of Information Transmission," Working Papers 2010.129, Fondazione Eni Enrico Mattei.
  • Handle: RePEc:fem:femwpa:2010.129
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Los retornos sociales de la educación: A pesar de que la sociedad gana, algunos pueden perder
      by David Bardey in Foco Económico on 2015-04-15 02:18:14

    More about this item

    Keywords

    Human Capital; The Economics of Rumors; Social Interactions; Urban Economics;

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy

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