2. Economics of Crime and Its Prevention
Chapter 5
Economics of Crime and Its Prevention

3. What Is Crime?
Immorality
Illegality

4. Classification of Criminal Acts
Department of Justice classification scheme
Violent crimes
Crimes against property
Traffic in illegal goods and services
Other crimes
Recent trends in crime

5. The Costs of Crime Opportunity Cost Principle
Direct costs
+ Negative Externalities
+ Cost of Prevention, Apprehension
and Correction
Total Cost of Crime
Transfers of Purchasing Power
Criminal activities versus Crime Prevention Activities

6. Classification of Goods
Individually Consumed Goods
Semi-collectively Consumed Goods
Externalities
Internalizing externalities
Collectively Consumed Goods
Free-rider problem
Government production of public goods

7. The Optimal Level of Crime Prevention
Cost-Benefit Analysis of Crime Prevention 1 2 3 4 5 6
Units of Crime Prevention per Year
Total Benefit to Society
Marginal Social Benefit
Total Cost of Society
Marginal Social Cost
Net Benefit to Society --
200 60
140
380
180
120
260
540
160
360
680
240
440
800
300
500
900
100 7
980 80
420
560 8
1040
480 9
1080 40 10
1110 20
600

8. Allocation of the Crime Prevention Budget
Equimarginal Principle

9. Changing the Legal Status of Goods and Services
Price per ounce D1 S2 P1 P2 D2 S1 D1 S2 M1 M2
Marijuana (millions of ounces per year)

10. Causes of Criminal Activity
Economic benefits of crime
Psychic income
Economic costs of crime
Psychic costs