saint louis universityYulia Sharakina

Economic approach to the opportunity to commit a crime“People decide whether to commit a crime or not, by comparing their expected benefits and costs of crime”.

May 3, 2015

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When approaching crime from the economic point of view, we take into consideration that people act

rationally based on their individual costs and benefits. We also should account for some psychological,

social, and moral factors that determine one’s behavior and induce an individual towards committing a

crime. A rational criminal will keep compelling a crime as long as its marginal benefit covers its marginal

cost. However, when a person decides to devote its life to delinquent activities he understands there are some

opportunity costs he undertakes. For instance, a criminal incurs opportunity costs for time and energy; since

it is logical to think that that time spent in wrongdoing could be devoted to do something else, for example in

more useful things like completing a master’s degree or finding a job.

According to Becker’s economic model, there is a legitimate income opportunity, as opportunity cost to

crime; “a potential criminal identifies some psychic o monetary benefit available through illegal activity,

faces indirect cost of an expected sanction…” –so, income becomes the most immediate opportunity cost of

being engaged in law-breaking conduct (Allen, David). We can call this type of people as “risk takers”?

There is a probability that a criminal can be caught, penalized and, possibly taken into prison. The issue

comes when that person sees more benefits than costs when, let’s say, one decides to steal a car.

Habitually, those people who are in bad economic situations, or who do not have high school education in

order to get a reasonable paid job, commit serious crimes. On the other hand, “white-collar”, or sophisticated

individuals, are more traced with misappropriate conducts. This is because poor people see more profits from

stolen money than from possible legal gains; they also do not have anything to lose if get caught (the

opportunity cost of committing a crime is high in this situation). 1

Other type of people who is highly involved in criminal activities are teenagers (the youth). Firstly, they do

not have as high-income alternatives as the adults have, and second, adolescents have a high discount rate1

when estimating the expected future costs of punishment; in other words, they underestimate the possible

consequences of their doings. Despite, the juvenile criminal law is less harsh than the adult’s penalties (it

recognizes their inexperience and immaturity), and weaker penalties serve as a stimulus for delinquency.

Furthermore, the high level of recidivism –tendency to repeat a crime, is absorbed among those who have

been already punished for committing an injustice and spent time in prison. For example, you are currently

1 Discounting: If we want to compare benefits and costs occurring at different time scales discounting is needed to express future costs or benefits at today’s equivalent value.

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working in a construction industry and you receive a serious injury, so you are temporally turned off from

work; it does not mean than after recovery you will change the job. A rational worker when chooses a

profession estimates future risks of his labor; so an accident will not affect that choice (G. Becker).

Consequently, offenders, after punishment, usually return to their habitual activity even with a higher desire

of breaking a law; the chance of being caught twice is lower so they feel more capable of success.

In order to get a complete picture of the total impacts of crime we need to estimate its direct and indirect

costs than burden the society; such costs as those incurred in anticipation of crimes (such as security

expenditures and insurance), and as a consequence of criminal events (such as property stolen and damaged,

emotional and physical impacts and health services), and those beaten costs when taking criminals (“such as

costs to the police, Crown Persecution Service, Legal Aid, costs to the prison and probation services…”),

(Sam Brand, and Richard Price).

According to “The Green Book” (HM Treasury, 1997), the opportunity cost of a resource is “the value of the

resource in its most valuable alternative use”. Here we have two different types of costs, market cost and

personal cost (emotional). For example, consider we are dealing with a “defensive behavior” an individual

may adopt in order to prevent his victimization of crime; he decides to buy a home security system costing

100,000 euros. The money he spent in security could be spent in something else; shopping, vacations, or

food –in this case we say he incurs a monetary cost.

Likewise, that person also suffers from emotional suffering. He fears to stay alone at home during the night,

or taking large trips so that someone can sneak into the house and steal valuable things. Emotional impact

overweighs financial costs (only a victim know how much it cost it). These costs include pain and suffering,

decrease in quality of life, and adverse psychological effects. In such circumstances people’s willingness to

pay (how mucho more) to prevent victimization increases, because we usually prefer to pay more and be

safe. A good example could be de health insurance; so that we pay annually a certain amount that does not

vary, so that in the case of accident we have full health coverage. On the other hand, if we don not have a

health insurance and we get into hospital we would pay just once but much higher amount that we would do

with constant payment.

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Time cost –instead of dealing with crime we could spend more time in leisure or at work, which is defined in

terms of lost output, thus, the entire cost is the loss of productivity and inefficient resource allocation,

because in the absence of crime the resources could be employed in a more productive way such as

improving public services, creating job opportunities, whether than devoting time to the improvement of

security systems, healthcare expenditures, and other economic costs. For example, in US more than 23

million criminal offences committed in 2007 resulted in $15 billion economic losses to the victims and $179

billion in judicial and legal activities (U.S. Department of Justice, 2008).

So, what measures can be undertaken in order to prevent crime and victimization so that the whole society

can be better off?: Evaluation of addition treatment, neighborhood policing, welfare reform programs such as

the improvement of educational system and decrease in unemployment rate, and any other programs should

be regarded further. Chiefly, preserve the family unit (marriage), since there is a higher rate in crime among

children from problematic families. With all these complementarities we can considerably reduce

victimization costs.

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Work Cited

Allen, David W. "Criminals and Victims." Google Books. Stanford University Press, 2011. Web. 31 Mar. 2015.

Becker, Gary S., and William M. Landes. Crime and Punishment: An Economic Approach. New York: National

Bureau of Economic Research, 1974. NBER. University of Chicago and National Bureau of Economic

Research. Web. 31 Mar. 2015.

"Crime Opportunity Cost Economics." Google Books. US Direct Data, n.d. Web. 01 May 2015.