Siena Seminar 04/2005. Crime and Law Enforcement. Nuno Garoupa Universidade Nova de Lisboa CEPR, London. OUTLINE Overview of the Economics of Law Enforcement. Introduction Background: The Classical School; The NeoClassical School. The Economics of Deterrence and Law Enforcement
The Early Days
[Cesare Bonesana, Marchese di Beccaria]
Of Crimes and Punishment, 1764
Introduction to the Principles of Morals and Legislation, 1789
“We perceive... that the severity of our criminal law (that is, the old criminal law inherited from England) is an exotic plan, and not the native growth of Pennsylvania... as soon as the principles of Beccaria were disseminated, they found a soil that was prepared to received them.”
William Bradford, 1793, US Attorney-General
[from 1880s to 1960s]
[from the 1960s on to today]
There will be crime if Benefits > Costs
Benefits of Crime [C] + Benefits from Punishment [G] – Costs of Crime [C]– Harm from Crime [V] – Enforcement Costs [G]
Illegal Gain < Harm
Illegal Gain > Harm
Probability x Fine = Harm
Harm = 100
Fines are costless transfers
Resources devoted to punishment are socially costly
High Fine – Low Probability
Fine= Entire Wealth
Probability should go to Zero
Harm/Fine – Marginal Cost of Enforcement
… Complete Deterrence.
… achieved by the Multiplier Principle.
… maximization of Social Welfare.
… about criminals being able to compensate victims (potential).
Deterrence with a Reduction in Enforcement Costs
Avoidance activities including defense expenditure
Corporate & Business Crime
Principal Agent Theory
Should the Management or the Shareholders be Punished?
Deterrence vs. “Cover Up”
Should we have comparative negligence rules in criminal law?
Miscarriage of justice
Systematic or Random?
Incentives for Enforcement Agents
Monitoring versus Investigation
What do Prosecutors maximize?
What do Judges maximize?LAW ENFORCEMENT LITERATURE(since 1979)
[Posner 1981, Parisi 2002 ALER, Garoupa and Gomez 2004]
[Friedman 1996 UChicago R., Glaeser and Shleifer 2002 QJE]
[Friedman 1979 JLS]
(Rubinfeld and Sappington, 1987 RAND; Garoupa and Gomez, 2004 ALER; Pistor and Xu, 2002)