Llad Phillips1 Jobs and Crime

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Llad Phillips3 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 Phillips4 Today Policy Issue: Gun Laws Seriousness ratings for ten behaviors   How much would you pay to prevent your bike being stolen? Experimental issue: Do economic conditions cause crime?

Llad Phillips5 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 Phillips6 Example: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 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 Phillips7 Example: Outline and Issues for Lecture Two Course logistics: gauchospace Course logistics: gauchospace Criminal Justice System (CJS) & economic paradigm: where do the values (prices) come from to evaluate the states (outcomes) of the CJS? Criminal Justice System (CJS) & economic paradigm: where do the values (prices) come from to evaluate the states (outcomes) of the CJS? How much crime is there? How do we know? How much crime is there? How do we know? Crime has two effects: Crime has two effects:  Redistribution of welfare from the victim to the perpetrator  Opportunity cost or waste of resources for defense

Llad Phillips8 The Graphics of Total Cost, TC TC = r*OF + E 8 $ E on CJS Total Cost (E) Minimum Cost Optimal Expenditure Economic Paradigm 1.Choose objective e. g. minimize sum of damages to victims plus expenditures, E, on CJS 2. Describe states of the world (options for choice) Total cost curve (E) 3. Choose the best option

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Llad Phillips12 Midterm I.40 II.20 III.40 IV.50

Llad Phillips13 Stories still in the news Congresswoman Gabrielle Giffords

Llad Phillips14 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 Phillips15 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 Phillips20 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 Phillips23 Public Sector Health Safety Civics Education

Llad Phillips24 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 Phillips25 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 Phillips26 Public Vs. Private Goods Labor for Public Goods Labor for Private Goods Contraint Labor, Private Private Goods Production Function

Llad Phillips27 L, public Output, Public L, Private Output, Private Production Possibility Frontier

Llad Phillips28 L, public Output, Public L, Private Output, Private Production Possibility Frontier

Llad Phillips29 Private Public Sweden UK US Mexico Canada

Llad Phillips30 Production Possibility Frontier PRIVATE PUBLIC Inefficient Does the global economy Cause a bias towards Private instead of public Goods and services?

Llad Phillips31 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 Phillips32 Expenditures Per Pupil FiscalYear CARank Nominal $, CA US

Llad Phillips33 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 Phillips34 US Politics “It’s the economy stupid!” “It’s the economy stupid!” Issues in 2008, 2009, 2010, & 2011 Issues in 2008, 2009, 2010, & 2011  Human capital and education  The family and social conservatives I will argue that the issues of family and education are connected

Llad Phillips35 7.2%29.6%

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

Llad Phillips37 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 Phillips41 Where is the economy headed? Survey of Professional Forecasters tml

Llad Phillips42 The forecasters can be wrong! A day late and a dollar short

Llad Phillips43 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 Phillips44 Outline Seriousness Survey Seriousness Survey  What can we learn from the survey? Crime File Crime File  Victims  Jobs and Crime Jobs and Crime Jobs and Crime  Why do some people get involved with crime?

Llad Phillips45 Class Survey Fall 2011 Vs. Winter 2011 Scoring Ten Behaviors Scoring Ten Behaviors 48 responses Fall responses Fall responses in Winter responses in Winter 2011

Llad Phillips46 SERIOUSNESS SURVEY RATE THE SERIOUSNESS OF EACH OF THE FOLLOWING BEHAVIORS ON A SCALE FROM ZERO( LEAST SERIOUS) TO TEN( MOST SERIOUS): MEDIAN W11 F11 1. HOMICIDE _10 10__ 2. MASS POISONING ( e.g. TYLENOL)_ 9 9__ 3. FORCIBLE RAPE _ 9 _10_ 4. ARSON: SET FIRE TO A GARAGE_ 7 __7 5. SELLING HEROIN _ 7 _7_ 6. AUTO THEFT _ 6 _6_ 7. EMBEZZLEMENT OF $1,000_ 5 __5 8. PROSTITUTE IN A HOUSE OF PROSTITUTION _ 4 __3 9. POSSESSION OF MARIJUANA _ 2 __1 10. SNIFFING GLUE _ 2 __1

Llad Phillips47 Center of the Scores Distribution Mode: most likely Mode: most likely Median: middle person Median: middle person Average: sum of scores divided by total number of people Average: sum of scores divided by total number of people

Llad Phillips48 2.5% mean

Llad Phillips49 Consistency from year to year

Llad Phillips50 Conclusions Consistency from year to year Triage is possible: we can separate the more serious behaviors from the less serious behaviors

Llad Phillips51 Distribution of Homicide Scores in F 2011

Llad Phillips52 Conclusions Consistency from year to year Triage is possible: we can separate the more serious behaviors from the less serious behaviors For serious behaviors, a clear majority view   For example, for homicide 43 out of 48 score it a 10, while 3 out of 43 score it a 9 and 2 out of 48 score it a 7.

Llad Phillips53 Distribution of Forcible Rape Scores F 2011 Over half the class score forcible rape a 10, 44 out of 48 score it 8 or above.

Llad Phillips54 Three ? Views on Pot, Fall 2011 Score: 0-2, 35 Score: 3-5, 11 Score: 6&7, 2 24, a score of 1, would carry a majority vote, 32, a score of 2, would carry a 2/3 vote

Llad Phillips55 Conclusions Consistency from year to year Triage is possible: we can separate the more serious behaviors from the less serious behaviors For serious behaviors, a clear majority view   For example, for homicide 43 out of 48 score it a 10, while 3 out of 43 score it a 9 and 2 out of 48 score it a 7. The less serious behaviors are more controversial!

Llad Phillips56 Question Since a 2/3 majority view pot possession as not very serious, a score of 2, why doesn’t pot get decriminalized?

Llad Phillips57 Dispersion of Scores Distribution Measures of dispersion Measures of dispersion  Standard deviation  Inter-quartile range  Range: Maximum - Minimum

Llad Phillips58 2.5% mean

Llad Phillips59 The more serious the behavior, the less disagreement about policy. Fall 2011

Llad Phillips60 Bureau of Justice Statistics, Report to the Nation The Alternative p.170 One more step: converting seriousness scores to a metric (years of sentence or Loss rate of $) The Economics of Crime Control, Ch. 4

Llad Phillips61 Source: $ 1.54 Million (1990), Orley Ashenfelter, Princeton, Based on highway safety Calibrating $ values for Seriousness

Llad Phillips62 BehaviorSeriousnessLoss Rate, $NIJ Cohen Homicide10$1,540,001$1,191,000 Poisoning9$354,830 Rape10$1,540,001$87,000 arson7$18,837$38,000 Selling heroin7$18,837 Auto theft6$4,340$4,000 embezzlement5$1, prostitute3$53 Pot possession1$2.82 Miller, Cohen, Wiersema: Victim Costs & Consequences (NIJ)

Llad Phillips63 Months Served in CA Prison Vs. F ’11 Seriousness Scores

Llad Phillips64 Jobs and Crime

Llad Phillips65 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 Phillips66 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 Phillips67 Why do people work in labor market? Tastes? Assume everybody has the same tastes! Human capital: earning power   Education   Work experience   Health

Llad Phillips68 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 Phillips69 Productive Life Cycle Social Institution Family - PreSchool - School - College - Job - Retirement Function Learning: Accumulating Human Capital - Earning - Spending Age Line

Llad Phillips70 Accumulating Human Capital InflowOutflow Stock

Llad Phillips71 Accumulating Human Capital Stock Inflow + - Outflow Net Inflow

Llad Phillips72 Accumulating Human Capital Human Capital Learning + - Depreciation Investment

Llad Phillips73 Allocation of Your Time Human Capital Build Capital by Learning Use Capital for Earning

Llad Phillips74 Time Endowment 24 hours

Llad Phillips75 24 hours0 hours Leisure (learning)

Llad Phillips76 Allocation of Your Time Human Capital Build Capital by Learning Use Capital for Earning

Llad Phillips77 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 Phillips78 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 Phillips80 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 Phillips85 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 Phillips87 Productive Life Cycle Social Institution Family - PreSchool - School - College - Job - Retirement Function Learning: Accumulating Human Capital - Earning - Spending Age Line

Llad Phillips88 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 Phillips92 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 Phillips93 Similar Scorings

Llad Phillips94 Different Scorings

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Llad Phillips97 Mean Rating

Llad Phillips98 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 Phillips99 Misery Index, California year Rate unemployment rate inflation rate misery index

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Llad Phillips102 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 Phillips103 Mode = 10, largest number of responses Median = 10, score of 31st person

Llad Phillips104 Mode = 10, largest number of responses Median = 10, score of 49 th person

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Llad Phillips106 Mode = 9 Median = 9

Llad Phillips107 Mode = 1 Median = 1

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

Llad Phillips109 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 Phillips111 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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