Llad Phillips1 Jobs and Crime

Llad Phillips2 Week One: Tuesday & Thursday Review Today: What is the relationship between crime and economics?   Life cycle and human capital (education, work experience, ability & health)   Business cycle? Why has crime been going down during the great recession?

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6 Midterm I.40 II.20 III.40 IV.50

Llad Phillips7 How to study for this course! Lecture course: go to lectures   No section and no TA Look at outline slide at the beginning of each lecture with the major points and a summary slide at the end of each PowerPoint with the major points Be familiar with the graphical analysis in the class notes & the PowerPoints Look at last Winter’s (2011) midterm for clues Read (listen, look, Google) the news and keep up with criminal justice system stories

Llad Phillips8 Summary for Lecture Two Crime is an economic problem Crime is an economic problem  loss of resources(dead weight loss) from private and public defense (graphical economic analysis) Damages to victims are 3 times as high for crimes against persons compared to crimes against property Damages to victims are 3 times as high for crimes against persons compared to crimes against property  Total for 7 FBI Index Crimes: $ 95 Billion (93 $) Shouldn’t society focus more on big ticket fraud: Enron, WorldCom, Bernard Madoff Investment Securities LLC?

Llad Phillips9 Crime as a dead weight loss Loss of resouces spent on defense Loss of resouces spent on defense  protection of homes  protection of cars  protection of bicycles Resources spent on defense Resources spent on defense  could be spent on goods and services  in the absence of crime The impact on social welfare The impact on social welfare  Unambiguously bad

Llad Phillips10 Victim’s Income Thief’s Income

Llad Phillips11 Victim’s Income Thief’s Income Thief’s Preferences 1. More is better, greedy 2. Indifferent to victim High Medium Low

Llad Phillips12 Victim’s Income Thief’s Income $6,000 Income Distribution

Llad Phillips13 Victim’s Income $6,000 Income Distribution $12,000 Total or Social Income Line: Thief’s + Victim’s Income $12,000 Thief’s Income

Llad Phillips14 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 Phillips15 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

Llad Phillips16 Today Policy Issue: Gun Laws Experimental issue: Do economic conditions cause crime?

Llad Phillips17 Stories still in the news Congresswoman Gabrielle Giffords

Llad Phillips18 What is the gun law in Arizona? Q: Is there a waiting period on gun sales? Q: Are handgun buyers required to complete safety training? Q: Is it required that you register all of your guns with law enforcement? Q: Are background checks required at gun shows? Q: Do state police and federal NICS perform a background check?

Llad Phillips19 What is the gun law in Arizona? Q: Is it mandatory that locking devices be sold with guns? Q: Is a license or permit required to buy handguns? Q: Are background checks required on 'private' gun sales? Q: Are there any restrictions regarding minors possessing guns? Q: May the police limit carrying concealed handguns?

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Llad Phillips24 A theme for this course US and CA criminal justice systems will be case studies, but are there larger issues about the public sector? US and CA criminal justice systems will be case studies, but are there larger issues about the public sector?

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Llad Phillips27 Public Sector Health Safety Civics Education

Llad Phillips28 What determines the quality of life in a nation, a state or a locality? The distribution of GDP between the public and private sectors?

Llad Phillips29 Total Tax Burden As % of GDP, 2004 Google Forbes overall tax burden CountryTotal Tax burden Sweden50.7% France43.7 UK36.1 Germany34.8 Canada33.0 Switzerland29.4 USA25.5 Mexico18.5

Llad Phillips30 Public Vs. Private Goods Labor for Public Goods Labor for Private Goods Contraint Labor, Private Private Goods Production Function

Llad Phillips31 L, public Output, Public L, Private Output, Private Production Possibility Frontier

Llad Phillips32 L, public Output, Public L, Private Output, Private Production Possibility Frontier

Llad Phillips33 Private Public Sweden UK US Mexico Canada

Llad Phillips34 Production Possibility Frontier PRIVATE PUBLIC Inefficient Does the global economy Cause a bias towards Private instead of public Goods and services?

Llad Phillips35 Production Possibility Frontier Public Goods: Defense Public Goods: Health Inefficient Does being the world’s Policeman cause a bias Away from other public Goods and services?

Llad Phillips36 Expenditures Per Pupil FiscalYear CARank Nominal $, CA US

Llad Phillips37 Production Possibility Frontier Public Goods: Prison Operation Public Goods: education Inefficient Which would you rather do (1) keep the 30% of state prisoners who are pot-heads locked up, or (2) educate your kids?

Llad Phillips38 US Politics “It’s the economy stupid!” “It’s the economy stupid!” Issues in 2008, 2009, 2010, 2011 & 2012 Issues in 2008, 2009, 2010, 2011 & 2012  Human capital and education  The family and social conservatives I will argue that the issues of family and education are connected

Llad Phillips39 7.2%29.6%

Llad Phillips % 5.8% 7.2/5.8 ~ 26% rise

Llad Phillips41 The Economy and Crime Is crime affected by the business cycle? Is crime affected by the business cycle? Do economic factors cause crime? Do economic factors cause crime?

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Llad Phillips45 Where is the economy headed? Survey of Professional Forecasters tml

Llad Phillips46 The forecasters can be wrong! A day late and a dollar short

Llad Phillips47 California Forecasts & Record: Umemployment rate: CA Dept. of Finance Year CA6.2%5.4%4.9%5.3%5.7%5.6%5.5% US5.5%5.1%4.6%4.6%5.0%5.0%4.8%

Llad Phillips48 Jobs and Crime

Llad Phillips49 Questions About Crime Does the Business Cycle Affect Crime Rates? Does the Business Cycle Affect Crime Rates? Does an Individual’s Life Cycle Affect Crime Rates? Does an Individual’s Life Cycle Affect Crime Rates? Why do some people live socially unproductive lives? Why do some people live socially unproductive lives?

Llad Phillips50 Two Points About Economic Conditions and Crime Relationship of Crime to the Business Cycle Relationship of Crime to the Business Cycle  Short Run: Business Cycle  Is Phil Cook wrong?  California: the misery index and crime  misery index = unemployment rate + inflation rate Relationship of Crime to the Life Cycle Relationship of Crime to the Life Cycle  Long Run  Investment in Education  Role of the Family

Llad Phillips51 Why do people work in labor market? Tastes? Assume everybody has the same tastes! Human capital: earning power   Education   Work experience   Health

Llad Phillips52 An Individual’s Life Cycle for a Socially Productive Life Learning over the life cycle Learning over the life cycle Accumulating earning power or human capital Accumulating earning power or human capital Earnings depend upon Earnings depend upon  ability  knowledge  work experience  health

Llad Phillips53 Productive Life Cycle Social Institution Family - PreSchool - School - College - Job - Retirement Function Learning: Accumulating Human Capital - Earning - Spending Age Line

Llad Phillips54 Accumulating Human Capital InflowOutflow Stock

Llad Phillips55 Accumulating Human Capital Stock Inflow + - Outflow Net Inflow

Llad Phillips56 Accumulating Human Capital Human Capital Learning + - Depreciation Investment

Llad Phillips57 Allocation of Your Time Human Capital Build Capital by Learning Use Capital for Earning

Llad Phillips58 Time Endowment 24 hours

Llad Phillips59 24 hours0 hours Leisure (learning)

Llad Phillips60 Allocation of Your Time Human Capital Build Capital by Learning Use Capital for Earning

Llad Phillips61 24 hours0 hours Leisure (learning) Earnings $480 Opportunities for trading leisure for earnings (income) at a rate, $20 per hour, determined by your stock of human capital $ 0

Llad Phillips62 Salaries by Education Level, CA Full Time* Workers *Full Time: >35 hrs/wk, >48 wks/yr.; Source: LA Times,

24 hours0 hours Leisure (learning) Earnings $480 $ 0 $240 dropout college grad

Llad Phillips64 Economists Assume You Can make Comparisons For example: you can compare a high level of your income and a low level of your leisure with a low level of your income and a high level of your leisure For example: you can compare a high level of your income and a low level of your leisure with a low level of your income and a high level of your leisure

24 hours0 hours Leisure (learning) Earnings $480 $ 0 Iso-Preference Curves: You value all points on a curve equally high low value high value

24 hours0 hours Leisure (learning) Earnings $480 $ 0 high low value high value Optimum 15 hours of leisure $180 for 9 hrs of work

24 hours0 hours Leisure (learning) Earnings $480 $ 0 high low value slope of the iso-preference curve through the 24 hour endowment is the lowest wage at which you are willing to work

24 hours0 hours Leisure (learning) Earnings $480 $ 0 high low value slope of the iso-preference curve through the 24 hour endowment is the lowest wage at which you are willing to work $96 dropout is unwilling to work for $4/hr

Llad Phillips69 Participation in the Labor Force: Willing to look for work If your market wage exceeds your reservation wage If your market wage exceeds your reservation wage  college participates  the junior high $4/hr, does not We assumed the college grad and the dropout both have the same values for income and leisure We assumed the college grad and the dropout both have the same values for income and leisure Only their learning histories differ Only their learning histories differ

24 hours0 hours Leisure (learning) Earnings $480 $ 0 high low value slope of the iso-preference curve through the 24 hour endowment is the lowest wage at which you are willing to work $96 dropout is unwilling to work for $4/hr

Llad Phillips71 Productive Life Cycle Social Institution Family - PreSchool - School - College - Job - Retirement Function Learning: Accumulating Human Capital - Earning - Spending Age Line

Llad Phillips72 Summary Your economic status affects your probable behavior: work or crime Your economic status affects your probable behavior: work or crime Earning power affects your probable behavior Earning power affects your probable behavior When you are a young teen you need a parent or role model to motivate you to stay in school and keep learning When you are a young teen you need a parent or role model to motivate you to stay in school and keep learning

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Llad Phillips76 Class Survey 2003 Scoring Ten Behaviors Scoring Ten Behaviors 113 Responses 113 Responses No two are the same No two are the same Two most similar responses Two most similar responses Two most different responses Two most different responses

Llad Phillips77 Similar Scorings

Llad Phillips78 Different Scorings

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Llad Phillips81 Mean Rating

Llad Phillips82 SERIOUSNESS SURVEY RATE THE SERIOUSNESS OF EACH OF THE FOLLOWING BEHAVIORS ON A SCALE FROM ZERO( LEAST SERIOUS) TO TEN( MOST SERIOUS): MEDIAN ‘03 ‘05 1. HOMICIDE _10 10__ 2. MASS POISONING ( e.g. TYLENOL) _ 9 8__ 3. FORCIBLE RAPE _ 9 9__ 4. ARSON: SET FIRE TO A GARAGE _ 7 7__ 5. SELLING HEROIN _ 6 6__ 6. AUTO THEFT _ 5.5 6__ 7. EMBEZZLEMENT OF $1,000 _ 4 4__ 8. PROSTITUTE IN A HOUSE OF PROSTITUTION _ 3 3__ 9. POSSESSION OF MARIJUANA _ 2 2__ 10. SNIFFING GLUE _ 1 1__

Llad Phillips83 Misery Index, California year Rate unemployment rate inflation rate misery index

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Llad Phillips86 How best to Learn in a Lecture class That does not Have a Section? We Recommend Going to class. The questions On the exams Are from topics Discussed in Class. How much math does 160 require? 1.Descriptive Graphs 2. Analytical Graphs (exams) 3. Notation e.g OF=f(CR,SE,SV)

Llad Phillips87 Mode = 10, largest number of responses Median = 10, score of 31st person

Llad Phillips88 Mode = 10, largest number of responses Median = 10, score of 49 th person

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Llad Phillips90 Mode = 9 Median = 9

Llad Phillips91 Mode = 1 Median = 1

Llad Phillips Frequency Score Number of Responses Vs. Possession of Pot Score ‘02

Llad Phillips93 Disagreement Versus Seriousness, 02 Arson Selling Heroin Auto Theft Embezzle Mass Poisoning Rape Homicide Prostitute Possess Pot Sniff Glue Score Dispersion (Standard Deviation) Homicide 2004

Embezzlement Standard Deviation or Dispersion

Llad Phillips95 John Tukey: Box Plot for Pot ‘09 Smallest = 0 Q1 = 1 Median = 1 Q3 = 3 Largest = 8 IQR = 2 Outliers: 8, 8, 8, 7,

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