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Why Do Increased Arrest Rates Appear to Reduce Crime: Deterrence, Incapacitation, or Measurement Error?

  • Steven D. Levitt

A strong, negative empirical correlation exists between arrest rates and reported crime rates. While this relationship has often been interpreted as support for the deterrence hypothesis, it is equally consistent with incapacitation effects, and/or a spurious correlation that would be induced by measurement error in reported crime rates. This paper attempts to discriminate between deterrence, incapacitation, and measurement error as explanations for the empirical relationship between arrest rates and crime. Using a modified version of the techniques of Griliches and Hausman (1986) for dealing with measurement error in panel data, this paper first demonstrates that the presence of measurement error does not appear to explain the observed relationship between arrest rates and crime rates. To differentiate between deterrence and incapacitation, the impact of changes in the arrest rate for one crime on the rate of other crimes is examined. In contrast to the effect of increased arrests for one crime on the commission of that crime, where deterrence and incapacitation are indistinguishable, it is demonstrated that these two forces act in opposite directions when looking across crimes. Incapacitation suggests that an increase in the arrest rate for one crime will reduce all crime rates; deterrence predicts that an increase in the arrest rate for one crime will lead to a rise in other crimes as criminals substitute away from the first crime. Empirically, deterrence appears to be the more important factor, particularly for property crimes.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 5268.

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Date of creation: Sep 1995
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Publication status: published as Levitt, Steven D. "Why Do Increased Arrest Rates Appear To Reduce Crime: Deterrence, Incapacitation, Or Measurement Error?," Economic Inquiry, 1998, v36(3,Jul), 353-372.
Handle: RePEc:nbr:nberwo:5268
Note: PE
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  1. A. Mitchell Polinsky & Steven Shavell, 1982. "The Optimal Use of Fines and Imprisonment," NBER Working Papers 0932, National Bureau of Economic Research, Inc.
  2. Levitt, Steven D, 1997. "Using Electoral Cycles in Police Hiring to Estimate the Effect of Police on Crime," American Economic Review, American Economic Association, vol. 87(3), pages 270-90, June.
  3. Benson, Bruce L. & Rasmussen, David W. & Kim, Iljoong, 1998. "Deterrence and Public Policy: Trade-Offs in the Allocation of Police Resources," International Review of Law and Economics, Elsevier, vol. 18(1), pages 77-100, March.
  4. Helen Tauchen & Ann Dryden Witte & Harriet Griesinger, 1993. "Criminal Deterrence: Revisiting the Issue with a Birth Cohort," NBER Working Papers 4277, National Bureau of Economic Research, Inc.
  5. George J. Stigler, 1974. "The Optimum Enforcement of Laws," NBER Chapters, in: Essays in the Economics of Crime and Punishment, pages 55-67 National Bureau of Economic Research, Inc.
  6. Zvi Griliches & Jerry A. Hausman, 1984. "Errors in Variables in Panel Data," NBER Technical Working Papers 0037, National Bureau of Economic Research, Inc.
  7. Grogger, Jeffrey, 1991. "Certainty vs. Severity of Punishment," Economic Inquiry, Western Economic Association International, vol. 29(2), pages 297-309, April.
  8. Andreoni, J., 1989. "Reasonable Doubt And The Optimal Magnitude Of Fines: Should The Penalty Fit The Crime," Working papers 8908, Wisconsin Madison - Social Systems.
  9. Gary S. Becker, 1974. "Crime and Punishment: An Economic Approach," NBER Chapters, in: Essays in the Economics of Crime and Punishment, pages 1-54 National Bureau of Economic Research, Inc.
  10. Cameron, Samuel, 1988. "The Economics of Crime Deterrence: A Survey of Theory and Evidence," Kyklos, Wiley Blackwell, vol. 41(2), pages 301-23.
  11. Waldfogel, Joel, 1993. "Criminal Sentences as Endogenous Taxes: Are They "Just" or "Efficient"?," Journal of Law and Economics, University of Chicago Press, vol. 36(1), pages 139-51, April.
  12. Ehrlich, Isaac, 1981. "On the Usefulness of Controlling Individuals: An Economic Analysis of Rehabilitation, Incapacitation, and Deterrence," American Economic Review, American Economic Association, vol. 71(3), pages 307-22, June.
  13. McCormick, Robert E & Tollison, Robert D, 1984. "Crime on the Court," Journal of Political Economy, University of Chicago Press, vol. 92(2), pages 223-35, April.
  14. Ehrlich, Isaac, 1973. "Participation in Illegitimate Activities: A Theoretical and Empirical Investigation," Journal of Political Economy, University of Chicago Press, vol. 81(3), pages 521-65, May-June.
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