Llad Phillips1 Social Welfare The Impact of Crime on Society

Llad Phillips2 Preview of Coming Attractions n Evaluate public sector activities in terms of benefits and costs u Costs: $ u Benefits ? How do we value public safety? There is not a “market” for public safety u Benefit cost ratio: benefits/costs u benefits/costs = crime*price/costs Crime: How much crime is there? Crime: Does society focus on the right types of crime?

Llad Phillips3 Who is this guy?

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5 Preview of Coming Attractions n Why is the Public Provision of Goods and Services in Crisis? u Costs are out of line with benefits u The management of the public provision of goods and services is out of the control of the public What we will learn in econ 160 also has application to other public sector goods such as health care and education. We will focus on public safety for our story and examples

Llad Phillips6 Outline and Issues n Course logistics: n Criminal Justice System (CJS) & economic paradigm: where do the values (prices) come from to evaluate the states (outcomes) of the CJS? n How much crime is there? How do we know? n Crime has two effects: u Redistribution of welfare from the victim to the perpetrator u Opportunity cost or waste of resources for defense

SERIOUSNESS SURVEY RATE THE SERIOUSNESS OF EACH OF THE FOLLOWING BEHAVIORS ON A SCALE FROM ZERO( LEAST SERIOUS) TO TEN( MOST SERIOUS): 1. HOMICIDE___ 2. MASS POISONING ( e.g. TYLENOL)___ 3. FORCIBLE RAPE___ 4. ARSON: SET FIRE TO A GARAGE___ 5. SELLING HEROIN___ 6. AUTO THEFT___ 7. EMBEZZLEMENT OF $1,000___ 8. PROSTITUTE IN A HOUSE OF PROSTITUTION___ 9. POSSESSION OF MARIJUANA___ 10. SNIFFING GLUE___

Llad Phillips11 A Theme for this Course n Criminal Justice System is in crisis. u Courts have told Governor Schwarzenegger to find housing for prisoners or release them early u City and County jails are overflowing and a revolving door policy is in effect. Repeat offenders clog the system u Not enough judges and prosecutors

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Llad Phillips13 We have met the enemy and he is us

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Llad Phillips17 It Has Not Always Been This Way n The Criminal Justice System had been relatively stable in the decade after World War II n What happened? That is the story of this course. n We will review the history of criminal justice in the 60 years since WW II. n We will suggest policies that will help turn things around now. In brief, what is needed is triage, i.e. to use scarce resources that will improve public safety the most.

Llad Phillips18 Social Welfare The Impact of Crime on Society

Llad Phillips19 Questions about crime n Is crime a real problem or a media induced problem? n Is crime an economic problem? n Are we getting our money’s worth for the dollars we spend on police, jails, and prisons?

Llad Phillips20 Taking Crimes n Robbery n Burglary n Auto Theft n Larceny

Llad Phillips21 How is Crime Measured n Victimization Surveys of Households u U S Dept of Justice, Bureau of Justice Statistics, Criminal Victimization n Citizen (Victim) Reports to Police u U S Dept of Justice, FBI, Uniform Crime Reports

Sourcebook of Criminal Justice Statistics, sourcebook Uniform Crime Reports

Llad Phillips23 Measures of Crime: Offense Rates n Thefts per 1000 registrations(FBI) = registrations per household * thefts per 1000 households(NCVS) u if registrations per household were growing in the 90’s then thefts per 1000 registrations would not fall as fast as thefts per 1000 households

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Llad Phillips33 Questions about the Operation of CJS n If crime is going down, why are we devoting more resources to its control? n If drug offenders are mostly non-violent, why do we send them to state prison instead of rehabilitation?

Llad Phillips34 Sourcebook of Criminal Justice Statistics: Uniform Crime Reports, Crime in the United States, Bureau of Justice Statistics: Crime in California, California Department of Corrections, Sources of Criminal Justice Information On the Internet

Llad Phillips35 Two Perspectives On Crime n No Problem n It’s Bad

Llad Phillips36 Crime as Income Redistribution n The Robin Hood Myth u Take from the rich and give to the poor n The impact on social welfare u depends on your views or values F socialist versus a capitalist

Llad Phillips38 Crime as a dead weight loss n Loss of resouces spent on defense u protection of homes u protection of cars u protection of bicycles n Resources spent on defense u could be spent on goods and services F in the absence of crime n The impact on social welfare u Unambiguously bad

Llad Phillips39 What is the nature of crime? n Income redistribution? n or dead-weight loss?

Llad Phillips40 Economists Assume You Know What You Like n Lingo: economists call these consumer tastes or consumer preferences

Victim’s Income Thief’s Income

Victim’s Income Thief’s Income Thief’s Preferences 1. More is better, greedy 2. Indifferent to victim High Medium Low

Llad Phillips43 Economists Assume You Can make Comparisons n For example: the thief can compare a high level of his income and a low level of the victim’s income with a high level of his income and a high level of the victim’s income u in the case just illustrated, the thief values these the same since his income stays the same F the thief does not care whether the victim’s income is high or low, i.e. he is indifferent

Victim’s Income Thief’s Income Victim’s Preferences 1. more is better, greedy 2. indifferent to the thief lowmediumhigh

Victim’s Income Thief’s Income $6,000 Income Distribution

Victim’s Income $6,000 Income Distribution $12,000 Total or Social Income Line: Thief’s + Victim’s Income $12,000 Thief’s Income

Victim’s Income Thief’s Income $6,000 Income Distribution $12,000 Total or Social Income Line: Thief’s + Victim’s Income $12,000 Income Redistribution $9,000 $3,000

Llad Phillips48 Bad effects from taking crimes n Victim has less incentive to be productive n Victim has more incentive to spend time and money on defense n Analogous to war: guns vs. butter n What is society going to produce? u defense against crime? u or goods and services?

Victim’s Income Thief’s Income $6,000 Income Distribution $12,000 Total or Social Income Line: Thief’s + Victim’s Income $12,000 Income Redistribution $9,000 $3,000 $11,000 $1,000 social cost of defense $11,000

Crime Generation Offense Rate, Damages to Victims Fear Media Defense PrivatePublic

Llad Phillips51 Cost to Victims in US, 1993 Source: National Institute of Justice, Victim Costs and Consequences (1996)

Assaulter’s Income Victim’s Income Total or Social Income Motivation for Violence: Antagonism Assaulters Iso-preference Lines High Low

Llad Phillips53 Damages: US Violence, 1993 Source: National Institute of Justice, Victim Costs and Consequences (1996)

Llad Phillips Reported Hate Crimes in California: 1998 Source: Hate Crime in California, 1998

Llad Phillips55 About 2/3 of Hate Crimes are Violent

Llad Phillips56 Types of Crime n Motivation: self-interest, greed u Street Crimes: robbery, burglary, auto theft, larceny u White Collar: embezzlement, tax evasion, investment fraud, check fraud, telephone fraud u Status Offenses: runaway, truant, vagrant, beyond control of parents u Black Market: gambling, prostitution,drugs

Llad Phillips57 Types of Crime n Motivation: Hate, Rage u Street Crimes: homicide, aggravated assault, rape u Crimes Against Public Order: vandalism, terrorism u Hate Crimes F Columbine High F James Byrd: dragging death in Texas F Jewish Community Center in Granada Hills

Llad Phillips58 CA Descriptive Statistics

Llad Phillips59 California: Trend in Robberies Per Capita in 90’s

Llad Phillips60 Violent Crime Mix, CA ‘03

Llad Phillips61 Types of Robberies in California, 1998

Llad Phillips62 California: Armed Robberies, 54% of Total, By Weapon

Llad Phillips63 Homicide by Weapon, CA ‘03

Llad Phillips64 California Crime Mix

Llad Phillips65 California Crime Index: Property Crimes

Llad Phillips66 Sources of Information p. of syllabus n US Data u Sourcebook of Criminal Justice Statistics F u Bureau of Justice Statistics F

Llad Phillips67 Summary n Crime is an economic problem u loss of resources(dead weight loss) from private and public defense n Damages to victims are 3 times as high for crimes against persons compared to crimes against property u Total for 7 FBI Index Crimes: $ 95 Billion Shouldn’t society focus more on big ticket fraud: Enron, WorldCom, Bernard Madoff Investment Securities LLC?

Assaulter’s Income Victim’s Income Total or Social Income Motivation for Violence: Antagonism Assaulters Iso-preference Lines High Low

Llad Phillips69 Split Personality Behaviors Jack Hirshleifer: “The Expanding Domain of Economics” Choice Work and no violence Work and brawl in bars (Economic Man with episodes of antagonism)

choice Work and no violence Work and brawl in bars expect $24,000/yr Apprehended: lose 1 month in court and jail, $22, Not apprehended $24,000 Expected income: 0.1*$22, *$24,000 = $23,800

Llad Phillips72 Trends In Crime in California Source: Crime and Delinquency in California,