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Crime and punishment with habit formation

  • Teles, Vladimir Kuhl
  • Andrade, Joaquim Pinto de

Moral concepts affect crime supply. This idea is modelled assuming that illegal activities is habit forming. We introduce habits in a intertemporal general equilibrium framework to illegal activities and compare its outcomes with a model without habit formation. The findings are that habit and crime presents a non linear relationship that hinges upon the level of capital and habit formation. It is possible to show that while the effect of habit on crime is negative for low levels o habit formation it becomes positive as habits goes up. Secondly habit reduces the marginal effect of illegal activities return on crime. Finally, the effect of habit on crime depends positively on the amount of capital. This could explain the relationship between size of cities and illegal activity.

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File URL: http://bibliotecadigital.fgv.br/dspace/bitstream/10438/2753/1/TD+199+-+Vladimir+Kuhl+Teles.pdf
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Paper provided by Escola de Economia de São Paulo, Getulio Vargas Foundation (Brazil) in its series Textos para discussão with number 199.

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Date of creation: 03 Sep 2009
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Handle: RePEc:fgv:eesptd:199
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  1. Joao Ricardo Faria & Miguel A. Leon-Ledesma, 2004. "Habit formation, work ethics and technological progress," Manchester School, University of Manchester, vol. 72(3), pages 403-413, 06.
  2. Amato, Jeffery D. & Laubach, Thomas, 2004. "Implications of habit formation for optimal monetary policy," Journal of Monetary Economics, Elsevier, vol. 51(2), pages 305-325, March.
  3. Isaac Ehrlich & Francis T. Lui, 1999. "Bureaucratic Corruption and Endogenous Economic Growth," Journal of Political Economy, University of Chicago Press, vol. 107(S6), pages S270-S293, December.
  4. Faria, Joao Ricardo, 2001. "Habit formation in a monetary growth model," Economics Letters, Elsevier, vol. 73(1), pages 51-55, October.
  5. Glaeser, Edward L & Sacerdote, Bruce & Scheinkman, Jose A, 1996. "Crime and Social Interactions," The Quarterly Journal of Economics, MIT Press, vol. 111(2), pages 507-48, May.
  6. Gaviria, Alejandro, 2000. "Increasing returns and the evolution of violent crime: the case of Colombia," Journal of Development Economics, Elsevier, vol. 61(1), pages 1-25, February.
  7. Fender, John, 1999. "A general equilibrium model of crime and punishment," Journal of Economic Behavior & Organization, Elsevier, vol. 39(4), pages 437-453, July.
  8. Gary S. Becker & Kevin M. Murphy, 1986. "A Theory of Rational Addiction," University of Chicago - George G. Stigler Center for Study of Economy and State 41, Chicago - Center for Study of Economy and State.
  9. Craig Burnside & Martin Eichenbaum & Jonas Fisher, 2003. "Fiscal Shocks and Their Consequences," NBER Working Papers 9772, National Bureau of Economic Research, Inc.
  10. Edward L. Glaeser & Bruce Sacerdote, 1996. "Why Is There More Crime in Cities?," NBER Working Papers 5430, National Bureau of Economic Research, Inc.
  11. repec:ebl:ecbull:v:11:y:2004:i:1:p:1-9 is not listed on IDEAS
  12. Gary S. Becker, 1968. "Crime and Punishment: An Economic Approach," Journal of Political Economy, University of Chicago Press, vol. 76, pages 169.
  13. repec:ebl:ecbull:v:17:y:2002:i:1:p:1-10 is not listed on IDEAS
  14. Dockner, Engelbert J & Feichtinger, Gustav, 1993. "Cyclical Consumption Patterns and Rational Addiction," American Economic Review, American Economic Association, vol. 83(1), pages 256-63, March.
  15. Alessie, Rob & Lusardi, Annamaria, 1997. "Consumption, saving and habit formation," Economics Letters, Elsevier, vol. 55(1), pages 103-108, August.
  16. Carneiro, Francisco Galrao & Loureiro, Paulo R.A. & Sachsida, Adolfo, 2005. "Crime and social interactions: a developing country case study," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 34(3), pages 311-318, May.
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