economics 160
Download
Skip this Video
Download Presentation
Economics 160

Loading in 2 Seconds...

play fullscreen
1 / 76

Economics 160 - PowerPoint PPT Presentation


  • 82 Views
  • Uploaded on

Economics 160. Lecture 5 Professor Votey Law Enforcement Effectiveness: Productivity. Votey 2, Notes: pp. 30-18. The Science of Decisionmaking. Methodology: The Economic Paradigm Recall 3 Steps (Notes, pp 3,4) 1. Specification:

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about ' Economics 160' - usoa


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
economics 160
Economics 160

Lecture 5

Professor Votey

Law Enforcement Effectiveness:

Productivity

Votey 2, Notes: pp. 30-18

the science of decisionmaking
The Science of Decisionmaking

Methodology:The Economic Paradigm

Recall 3 Steps(Notes, pp 3,4)

1. Specification:

Specify the Alternative States of the World

2. Valuation:

Establish a Value System, e.g. Prices

3. Optimization:

Picking the “Best” Solution

Profit Maximization, Cost Minimization

slide3

Minimizing the Net Social Costs of Crime:

An Application of Economic Decisionmaking

The Tool: Some Form of Cost/Benefit Analysis

Costs

Social Costs of Crime

(SC)

Costs to Victims

(VC)

Control Costs

(CC)

Offenses

(Crime Level)

OF*

Notes, p. 4

Minimum Social Cost of Crime

slide4

Minimizing the Net Social Costs of Crime:

An Application of Economic Decision-making

The Tool: Some Form of Cost/Benefit Analysis

We referred to: E. J. Mishan, Cost-Benefit Analysis, Ch. 3,

in REFERENCES (RBR)*

Costs

Social Costs of Crime

(SC)

VC

Costs to Victims

Control Costs

(CC)

Offenses

(Crime Level)

OF*

Minimum Social Cost of Crime

slide5

*Ed Mishan, an English economist is a well known figure to the older members of the Econ Department, having been an academic visitor here on at least two occasions (the two during my time here which began in Fall 1966). He is one of the internationally known economists who played a role in developing the economic science behind the huge infrastructure investments made during the Great Depression that created such enormous projects as the Hoover Dam on the Colorado River.

That same science would form the basis for any public projects today that might be undertaken to create jobs and repair U. S. infrastructure as has been recently proposed.

Since those days, there has been much criticism of such investments, mostly by individuals who believe that any investments by society should be limited to the private

slide6
sector since they believe only markets can lead to efficient outcomes. Interestingly, the Hoover Dam, arguably the largest public project undertaken by any country up to that time, was completed under budget and ahead of schedule.

There have been many criticisms of such fiscal policy stimulants as originally advocated by the British economist John Maynard Keynes. They do take time to work and only seem to work markedly on a massive scale.

Our economy did not fully recover during the 1930’s, but the policy was certainly vindicated by our participation in WW II, when we put 16,000,000 people to work in the military while going from a third rate to the greatest military establishment in the world with a two ocean navy and an air force second to none, both of which we continued to maintain following the war, while simultaneously paying for the rebuilding of the economies of both our allies and enemies with Marshall Plan Aid,and while paying off our own debt that we undertook to fight the war.

minimizing the costs of crime1
Minimizing the Costs of Crime

Objective: Min SC = VC + CC

Notes, p 5

minimizing the costs of crime2
Minimizing the Costs of Crime

Objective: Min SC = VC + CC

The Logic:

The minimum social cost of crime is the smallest sum

We could realize, of victim costs plus the costs of crime control.

If we minimize the costs of a “BAD”, we have more

of our resources left to spend on “GOODS”.

slide10

Recall from Lecture 1 the circular flow diagram that represented the interacting system of Crime Generation and Control

Text Reference: Economics of Crime Control, Chapter 9 and in Notes, p13

slide11

Economic Notions of Productivity

  • Consider A Steel Mill – an example from heavy industry
    • Resources:
          • Raw Materials: Iron Ore, Coal, Limestone
          • Labor: Variety of Skills
          • Capital: Blast Furnace, Oxygen Furnace Rolling Mills, Plating Mills
    • Technology: Means of Linking Inputs
    • Output: Iron, Finished Steel
  • How does one make a Reasonable Analogy between a typical production process and the Criminal Justice System?
  • Next: Conceiving of Outputs
the criminal justice system
The Criminal Justice System
  • Theory
    • 1. Basis for Defining/Identifying Outputs
  • A Schematic
    • 1. Functions
    • 2. Stages of Operation
    • 3. Operating Entities
    • 2. Basis for Evaluating Effectiveness
  • Empirical Evidence
slide13

Notes, p 14, Figure 2.2

Criminal Justice System:

The Real World Process

Input

OF

Stage 1 Function

Law Enforcement

POLICE FORCE

Operating Entity

Produces

Prosecution Stage 2

ARRESTS

DA

COMPLAINTS

Adjudication

COMPLAINTS

Stage 3

COURTS

INDICTMENTS

Stage 4

Corrections

or Punishment

CONVICTION

(guilty)

DISMISSAL

(not guilty)

INPUTS/

OUTPUTS

JAILS,PRISON,PROBATION

?

RELEASE

(PAROLE)

slide14

How Good is the output analogy in cases of

non-market decision making?

Consider other Public Service Industries:

  • Education - What is the output?
    • Number of Students ? - or are these inputs?
    • Number of Graduates?
  • Hospitals - What is the Output?
    • Number of Patients ?
    • Again, this is an input
    • Lives Saved?
    • For how long?
    • What determines hospitals’ rankings?
an aside about the past
An Aside - about the past
  • Physical Outputs in a Command Economy –
    • How are they measured?
    • A story from? George Karcz
    • Or maybe Doug Morgan
      • About Light Fixtures
slide16

What did we decide was the proper social

objective with respect to CRIME?

Minimizing the Social Cost

slide17

Minimizing the Social Cost

  • What does this mean in terms of productivity?
slide18

Minimizing the Social Cost

  • What does this mean in terms of productivity?
  • Reducing Crime Numbers or Seriousness (or both)
minimizing the social cost
Minimizing the Social Cost

Notes, p.5

  • Recall: Social Cost Minimization implies:
    • Min SC = VC + CC i.e., Victim Costs + Control Costs
  • Irrespective of the values we place on individual offenses, as long as they are positive,Social Cost Minimization requiresReducing CrimeNumbers or Seriousness
minimizing the social cost1
Minimizing the Social Cost
  • Recall: Social Cost Minimization implies:
    • Min SC = VC + CC i.e., Victim Costs + Control Costs
  • Irrespective of the values we place on individual offenses, as long as they are positive,Social Cost Minimization requiresReducing Crime Numbers or Seriousness or Reducing Control Costs
minimizing the social cost2
Minimizing the Social Cost
  • Recall: Social Cost Minimization implies:
    • Min SC = VC + CC i.e., Victim Costs + Control Costs
  • Irrespective of the values we place on individual offenses, as long as they are positive, Social Cost Minimization requires Reducing Crime Numbers or Seriousness or Reducing Control Costs
  • Consider the Circular Flow Process: (again)
minimizing the social cost3
Minimizing the Social Cost
  • Irrespective of the values we place on individual offenses, as long as they are positive,Social Cost Minimization requiresReducing Crime Numbers or Seriousness (or control costs)
  • Recall: Social Cost Minimization implies:
    • Min SC = VC + CC i.e., Victim Costs + Control Costs
  • Consider the Circular Flow Process: (again)

Notes, p. 5

minimizing the social cost4
Minimizing the Social Cost
  • Recall: Social Cost Minimization implies:
    • Min SC = VC + CC i.e., Victim Costs + Control Costs
  • on individual offenses, as long as they are positive, Social Cost Minimization requires Reducing Crime Numbers or Seriousness (or both)
  • Consider the Circular Flow Process: (again) Irrespective of the values we place

Victim Costs +

looking at the circular flow process one observes that arrests and offenses seem to move together
Looking at the Circular Flow Process, One observes thatArrests and Offensesseem tomove together
  • Separating the Effects
    • Resort to the Economic Paradigm and
    • Economic Decision Theory
  • Appeal to the approach of
    • The Utilitarians
    • Jeremy Bentham - the father of . . .
        • Modern Economic Decision Theory
        • Evaluating Results Based on Expected Net Benefits
slide25

What we are trying to do at this point?

Find out what works to control crime.

But we want to find out the BEST way,

optimization, i.e. determining Best Policy

It is great to have a theory

It is better to have a theory that we know works.

With appropriate research a theoretical model

becomes a policy model

This work facilitates the implementation of the Economic Paradigm

economic decision theory in a nutshell
Economic Decision Theory in a Nutshell
  • Expected Net Benefits (of any action):
  • Expected Net Benefits = Expected Benefits - Expected Costs E(NB) = E(B) - E(C)
  • In terms of value:the Value of the Expectation = $B x P(B) - $C x P(C)
  • The Basis for:
    • The decision from the potential criminal’s point of view?

And

    • The logical counter policy from Society’s point of view?
    • These are two sides of the same coin
working within the framework of the criminal justice system
Working within the framework of the Criminal Justice System
  • Bentham’s focus: “Pain” - the institutional counterpart:
    • Punishment via the system of Corrections
  • Enlarging the Expectation: Increase the likelihood of pain
    • We call this combination of activities Deterrence
  • The Criminal Justice System: is involved at every stage
    • Raising the expected cost implies:$C x P(C) = P(Arrest) x P(Conv|Arrest) x P(Jail|Conv) x $Jail
    • Each Stage contributes to the reduction inCRIME
criminal justice system measures of output
Criminal Justice System Measures of Output
  • Quantity Measures
    • A. The number of Arrests
      • Made on basis of probable cause
    • B. Arrest Ratio(a relative measure)
      • = AR = Arrests / Offenses
      • Was declining in 1960’s and ‘70’s for U.S. and California
    • Q. Do Arrests deter crime?
      • Sjoquist, American Economic Review (1973) – in References
      • San Diego
      • Problem: Arrests may not be best measure
criminal justice system measures of output cont
Criminal Justice System Measures of Output (-cont.)
  • Quality Measures
    • A. Clearances (an absolute measure)
      • crimes cleared by arrest = CL
      • The last burglar - an example
    • B. Clearance Ratio (a relative measure)
      • = CR = Clearances / Offenses
      • Problems with the Clearance Ratio
  • System Quality
    • A. Convictions (an absolute measure)
      • Outcome determined in a court of law
criminal justice system measures of output cont1
Criminal Justice System Measures of Output (-cont.)
  • B. Conviction Ratio (a relative measure)
    • CR =Felony Convictions / Offenses(sometimes CR)
  • Other Measures
    • A. Police Ratio
      • = Complaints (filed in courts) / Offenses
      • measures combined quality of Police & DA efforts
    • B. Complaints Ratio
      • = Complaints (filed w/DA) / Arrests
      • measures quality of Police efforts by DA
the effect of increasing expenditures for law enforcement in california and the u s
The Effect of Increasing Expenditures for Law Enforcement in California and the U. S.
how do we use output measures to evaluate the system economic production theory
How Do We Use Output Measures to Evaluate the System?EconomicProduction Theory

Output

Case of:

Constant Returns

to Scale

Fixed Proportions

Inputs

Notes, Fig.2.3, p.16

economic production theory applied to law enforcement
Economic Production Theory Applied to Law Enforcement

CL

Case of:

Varying Proportions

CL

Production: CL = f( OF, L)

Assumes the load

on the System

(offenses) is held

fixed

OFFENSES

(load on the System)

RESOURCES

(labor)

An example of Diminishing Returns

L

What if we hold Resources Fixed and Increase Offenses?

Notes, Fig. 2.5, p 17

economic production theory applied to law enforcement1
Economic Production Theory Applied to Law Enforcement

CL

Case of:

Varying Proportions

CL

Production: CL = f( OF, L)

Assumes System

Resources are held

fixed while offenses

vary

OFFENSES

(load on the System)

RESOURCES

(labor)

OF

Notes, Fig. 2.5, p.17

economic production theory applied to law enforcement2
Economic Production TheoryApplied to Law Enforcement

CL

Case of:

Varying Proportions

CL

Production: CL = f( OF, L)

Assumes System

Resources are held

fixed while offenses

vary

OFFENSES

(load on the System)

RESOURCES

(labor)

OF

So much for Productivity, What does this imply about

Police Effectiveness?

determining police effectiveness
Determining Police Effectiveness

CL

A

Notes Fig. 2.6, p.17

CL1

0

OF1

OF

determining police effectiveness1
Determining Police Effectiveness

CL

A

CL1

Notes Fig. 2.6, p.17

How do we

measure

Police

Effectiveness?

a

0

OF1

OF

As Slope of 0A = tan a = OF to A = CL1

0 to OF1 OF1

determining police effectiveness2
Determining Police Effectiveness

CL

A

CL1

Notes Fig. 2.6, p.17

How do we

measure

Police

Effectiveness?

a

0

OF1

OF

Does anyone

recall what this is?

As Slope of 0A = tan a = OF1 A = CL1

0 OF1 OF1

determining police effectiveness3
Determining Police Effectiveness

CL

A

CL1

Notes Fig. 2.6, p.17

a

0

OF1

OF

tan a = OF1 A = CL1 = CR1 The CLEARANCE RATIO

0 OF1 OF1

to plot the clearance ratio for various offense levels
To plot the Clearance Ratio for various Offense Levels

CL

B

CL2

A

CL1

a

0

OF1

OF2

OF

Notes Fig. 2.6, p.17

to plot the clearance ratio for various offense levels1
To plot the Clearance Ratio for various Offense Levels

CL

B

CL2

A

CL1

Notes Fig. 2.6, p.17

a

0

OF1

OF2

OF

Plot points A and B in space showing the Clearance

Ratio relative to Offense levels

plotting points a and b in cr of space
Plotting points A and B in CR - OF space

Note that CR1 = CL1> CR2 = CL2

OF1 OF2

and

line AB is drawn holding L constant

CR

A

CR1

B

CR2

(CR,OF|L0)

0

OF1

OF2

OF

What happens to Police Effectiveness with an increase

in Police Resources?

slide46

The change in Police Effectiveness with an increase

in Police Resources, holding Offense levels constant

CR

Higher Effectiveness, Effect of New level of

Police Resources

A

CR1

(CR,OF|L1)

B

CR2

(CR,OF|L0)

0

OF1

OF2

OF

We can show this in terms of alternative levels of Resources

slide47

Police Effectiveness in terms of

alternative levels of Resources

CR

Curves illustrated assume

Economic Efficiency, i.e.,

that Resources are being

used efficiently.

Offenses are being

held constant

0

L

Notes, Fig. 2.8, p18

What if they are not ?

slide48
What if Police are not efficient, but simply “satisficing”, i.e., just working sufficiently hard to maintain Clearance Ratios?

CL

We will not observe diminishing

returns since the police are not

working to their limit to begin with.

B

A

OF

slide49
What if Police are not efficient, but simply “satisficing”, i.e., just working sufficiently hard to maintain Clearance Ratios?

CL

We will not observe diminishing

returns since the police are not

working to their limit to begin with.

B

A

OF

CR

Performance

standards appear to

be maintained, since

Clearance Ratios

are maintained

A

B

OF

slide50
What if Police are not efficient, but simply “satisficing”, i.e., just working sufficiently hard to maintain Clearance Ratios?

CL

We will not observe diminishing

returns since the police are not

working to their limit to begin with.

B

A

OF

What would this

imply in Economic

terms ?

CR

Performance

standards appear to

be maintained, since

Clearance Ratios

are maintained

A

B

OF

depicting police manpower inefficiency
Depicting Police Manpower Inefficiency

CR

efficient production

observed output level

if police only work to

maintain the Clearance

Ratio

L

depicting police manpower inefficiency1
Depicting Police Manpower Inefficiency

CR

efficient production

slack

observed output level

if police only work to

maintain the Clearance

Ratio

L2

L1

L

As manpower is increased

slack increases

, but output level

doesn’t rise

If this were the true picture, how could we tell ?

depicting police manpower inefficiency2
Depicting Police Manpower Inefficiency

CR

efficient production

slack

observed output level

if police only work to

maintain the Clearance

Ratio

L2

L1

L

slack increases as manpower

increases

There would be no statistical relationship between

Police Resources and the Clearance Ratio.

looking at the empirical evidence looking at the real world
Looking at the Empirical Evidence: Looking at the Real World
  • A. Acquire Data
    • 1. Outputs: CL, CR
    • 2. Inputs:
      • Resources: EMP, OTE, L
      • Case Load: OF
      • Technological Change: systematic changes over time not related to inputs
  • B. Work Out Theoretical Statistical Models
    • 1. Productivity: CL = f( OF, EMP, OTE, t)
    • 2. Effectiveness: CR = f( OF, EMP, OTE, t)
    • 3. and : CR = f( OF, L ) with other data

Based on Theory, what do we expect to find ?

switching
Switching
  • Notice that, at this point, I have switched from discussing the theory of what we have studied to moving toward the testing of our theoretical model.
  • Recall the distinction made in the introduction to the course between Positive and Normative economics.
  • We are moving into the realm ofPositive Economics – determining how the real world of crime and justice works
slide56
Such work has been the focus of much of the research of Professor Phillips and myself.
  • A worthy less technical exercise in positive economics:Freakonomics, is by Steven Levitt, who describes himself as a “rogue economist.” Some of it is about crime. It provides an easy description of the logic behind his work and ours.
  • Throughout the course, we shift between explaining the theory behind our analysis, positive economics – testing the theory, and normative economics – the discussion of what this all implies for sound public policy.
  • Next, the results of our testing of production theory as it relates to crime and justice.
expected outcomes from statistical evaluation economic theory would predict
Expected Outcomes from statistical evaluation: Economic Theory Would Predict

dCR / dOF < 0 dCR / dL > 0 dCR / dt > 0 (if Tech D)

CR CR CR

t2

t1

L1 L2

Varying: OF|L,t Varying: L|OF,t Varying t|OF,L

The question we would hope to be able to answer by looking at real world data is whether these expectations are borne out.

for the answer one should refer to the text the economics of crime control chapter 9
For the answer one should refer to the text,The Economics of Crime Control, Chapter 9

the statistical form used for estimation:

CR = k elt OFwEMPb1OTEb2 e

the Cobb-Douglas Production Function, from

Paul Douglas, ”Are there Laws of Production”, American Economic Review (1939)

w, b1, b2are elasticities

w = % D CR

1% DOF

for the answer one should refer to the text the economics of crime control chapter 91
For the answer one should refer to the text,The Economics of Crime Control, Chapter 9

the statistical form used for estimation:

CR = k elt OFwEMPb1OTEb2 e

the Cobb-Douglas Production Function, from

Paul Douglas, ”Are there Laws of Production”, American Economic Review (1939)

w, b1, b2are elasticities

w = % D CR b1 = % D CR

1% DOF 1% D EMP

for the answer one should refer to the text the economics of crime control chapter 92
For the answer one should refer to the text,The Economics of Crime Control, Chapter 9

the statistical form used for estimation:

CR = k elt OFwEMPb1OTEb2 e

the Cobb-Douglas Production Function, from

Paul Douglas, ”Are there Laws of Production”, American Economic Review (1939)

w, b1, b2are elasticities

w = % D CR b1 = % D CR _b2= % D CR__

1% DOF 1% D EMP 1% D OTE

for the answer one should refer to the text the economics of crime control chapter 93
For the answer one should refer to the text,The Economics of Crime Control, Chapter 9

the statistical form used for estimation:

CR = k elt OFwEMPb1OTEb2 e

the Cobb-Douglas Production Function, from

Paul Douglas, ”Are there Laws of Production”, American Economic Review (1939)

w, b1, b2are elasticities

w = % D CRb1= % D CR b2= % D CR_

1% DOF 1% D EMP 1% D OTE

l = rate of growth of output, independent of OTE, EMP, OF

empirical results for 4 felony crimes burglary larceny theft auto theft robbery
Empirical Results for 4 Felony Crimes: Burglary, Larceny(Theft), Auto Theft, Robbery
empirical results for 4 felony crimes burglary larceny theft auto theft robbery1
Empirical Results for 4 Felony Crimes: Burglary, Larceny(Theft), Auto Theft, Robbery

Parameter Variable Prediction Estimate Range

empirical results for 4 felony crimes burglary larceny theft auto theft robbery2
Empirical Results for 4 Felony Crimes: Burglary, Larceny(Theft), Auto Theft, Robbery

Parameter Variable Prediction Estimate Range

w OF < 0 - .37 to -.88

empirical results for 4 felony crimes burglary larceny theft auto theft robbery3
Empirical Results for 4 Felony Crimes: Burglary, Larceny(Theft), Auto Theft, Robbery

Parameter Variable Prediction Estimate Range

w OF < 0 - .37 to -.88

b1 EMP > 0 NS to .72

empirical results for 4 felony crimes burglary larceny theft auto theft robbery4
Empirical Results for 4 Felony Crimes: Burglary, Larceny(Theft), Auto Theft, Robbery

Parameter Variable Prediction Estimate Range

w OF < 0 - .37 to -.88

b1 EMP > 0 NS to .72

b2 OTE > 0 .13 to .30

empirical results for 4 felony crimes burglary larceny theft auto theft robbery5
Empirical Results for 4 Felony Crimes: Burglary, Larceny(Theft), Auto Theft, Robbery

Parameter Variable Prediction Estimate Range

w OF < 0 - .37 to -.88

b1 EMP > 0 NS to .72

b2 OTE > 0 .13 to .30

l Time > 0 NS

empirical results for 4 felony crimes burglary larceny theft auto theft robbery6
Empirical Results for 4 Felony Crimes: Burglary, Larceny(Theft), Auto Theft, Robbery

Parameter Variable Prediction Estimate Range

w OF < 0 - .37 to -.88

b1 EMP > 0 NS to .72

b2 OTE > 0 .13 to .30

l Time > 0 NS

NS = Not statistically different from zero

empirical results for 4 felony crimes burglary larceny theft auto theft robbery7
Empirical Results for 4 Felony Crimes: Burglary, Larceny(Theft), Auto Theft, Robbery

Parameter Variable Prediction Estimate Range

w OF < 0 - .37 to -.88

b1 EMP > 0 NS to .72

b2 OTE > 0 .13 to .30

l Time > 0 NS

NS = Not statistically different from zero

Note: The formulations estimated for each of the four offenses

produced estimates of % of “explained” variance (R2)

ranging from 78 to 86.

empirical results for 4 felony crimes burglary larceny theft auto theft robbery8
Empirical Results for 4 Felony Crimes: Burglary, Larceny(Theft), Auto Theft, Robbery

Parameter Variable Prediction Estimate Range

w OF < 0 - .37 to -.88

b1 EMP > 0 NS to .72

b2 OTE > 0 .13 to .30

l Time > 0 NS

NS = Not statistically different from zero

Note: The formulations estimated for each of the four offenses

produced estimates of % of “explained” variance (R2)

ranging from 78 to 86.

These results can be displayed graphically as well.

law enforcement effectiveness estimates for the u s 1952 1968
Law Enforcement Effectiveness Estimates for the U. S.,1952-1968

Forecast

Estimation

Text, p. 93

slide72

Patterns for the Clearance Ratio and Offense Rates for Robbery in Comparison with Expenditures for Law Enforcement for the United States, 1952 - 1967.

Early Trend in Law Enforcement

Expenditures

Text, p.93

and the levels of police protection in place relative to overall offense rates over the same period
-and the Levels of Police Protection in Place, Relativeto Overall Offense Rates, over the same period

2008

ideas to remember
Ideas to Remember
  • The Economic Paradigm (3 steps)
  • The objective in dealing with crime
      • Minimizing the Social Cost of Crime
  • Jeremy Bentham
      • Who was he? What did he do?
  • Economic Production Theory
      • How does it apply to the analysis of crime?
  • The empirical evidence
      • What does it tell us?
professor votey

Professor Votey

Jobs and Crime:

Youth and Women

Notes, Votey 3, p. 31

ad