Part F-I The Economic Theory of Crime and Punishment Inadequacy of Tort Law and the Necessity of Criminal Law 10/21/08 Crime_B

Objectives - distinguish between civil and criminal prosecutions 10/21/08 Crime_B

Inadequacy of Tort Law and the Necessity of Criminal Law Most crimes are also torts (someone gets injured in some way) If civil suits could cause the potential injurers (potential criminals) to internalize the total social cost of their actions, then criminal law might be unnecessary. Why civil suits cannot do this? 10/21/08 Crime_B

1. Inherent limitations of ‘compensation’ - losing a leg, being killed, being abused? - we cannot really define a sum of money that provides perfect compensation in many cases. - in these cases civil compensation by courts provides potential injurers with the incentives not to take unreasonable risks 10/21/08 Crime_B

The problem of ‘preference revelation’. - Similarly criminal punishment is intended to ‘deter intentional harms’ not compensate for it. - How much would you accept to lose an eye, a child, your dignity? This makes little sense. - The victim cannot really considered these questions in terms of a sum of money – perhaps this is were ‘vengeance’ enters? The problem of ‘preference revelation’. 10/21/08 Crime_B

What would the ‘market for victims’ be like? Who would commit more crime, the rich or the poor? Rich criminals – poor victims 10/21/08 Crime_B

- the rich would be ‘judgment proof’ against major crimes Bankruptcy problem - the rich would be ‘judgment proof’ against major crimes - the poor would be ‘judgment proof’ against all crimes What about the ‘public’ portion of the harm? - who gets compensated for this? We would have all the usual problems of determining perfect compensation under tort law and more 10/21/08 Crime_B

Rights versus interests 2. What about the wide range of crimes for which perfect compensation is possible, can we dispense with criminal law? NO. Rights versus interests Example: Law of trespass protects interests in property but does not grant an absolute right to property. A person can trespass in an emergency but must pay compensation. 10/21/08 Crime_B

- such ‘rights’ are inalienable by commerce We can compensate for the harm caused by infringing on ‘interest’ in property At times we will want to protect ‘rights’ not ‘interests’ - life, liberty, the pursuit of happiness - such ‘rights’ are inalienable by commerce The infringement of a ‘right’ diminishes liberty Protecting ‘interests’ secures wealth but protecting ‘rights’ enhances liberty (inalienable by commerce) 10/21/08 Crime_B

3. Perfect compensation might not be able to deter crime so that punishment becomes necessary. Thief steals a $30,000 car gets caught five minutes later and must return the car and pay $100 for the victim’s time and out-of-pocket expenses - perfect compensation Not good enough, the victim is returned to her former level of well-being, but the thief is not deterred from committing further thefts. Why not? 10/21/08 Crime_B

Consider expected gain from theft (1-PrCCP)*Take + PrCCP*(Take – Compensation) Where: PrCCP is the probability of being caught, convicted and punished Take is the value of the theft Compensation is the loss of the victim The thief stole a $30,000 car got caught and was required to return the car and pay $100 for the victim’s time and out-of-pocket expenses - perfect compensation But what if there was only an 80% chance that the thief would have been caught? Expected value to the thief of stealing the car: 0.2($30,000) + 0.8($30,000 - $30,100) = $6,000 - $80 = $5,920 10/21/08 Crime_B

Internalization for torts versus deterrence for crimes If - perfect compensation not possible (in principle or practice) - we desire to protect rights (inalienable) not interests - enforcement errors occur then punishment is necessary as opposed to compensation. Compensation would allow the criminal to ‘pay the price’ and do whatever they want. Criminal law seeks to deter the behaviour. 10/21/08 Crime_B

Psychological commitment and punishment: The stronger the psychological commitment to the act the greater the required deterrence. - deliberate act versus accident - deliberate act versus spontaneous act (pre-meditation) - repeated crime vs. first offence This is not the case for simple internalization of the costs of an act, the injurer’s state of mind does not really matter, they will pay whatever is required to compensate the victim. 10/21/08 Crime_B

What acts should be ‘punished’ (be criminal) Acts should be punished when the objective is ‘deterrence’ Acts should be priced (require compensation) when the object is internalizing costs. 10/21/08 Crime_B