Wednesday, March 31, 2010

Ugly Criminals

An economist friend of mine made the following claim: "Criminals are uglier than law-abiding people--it's simple economics at work."

Provide an economic explanation for the above claim. Also, provide one testable hypothesis regarding this claim.


TAO YUAN said...

A criminal commits a crime, for the reason that his (her) expected cost is lower than the expected benefit.

The benefits are property interest or spiritual fulfillment.

The cost consists of direct cost referring to tools for criminal purpose, opportunity cost referring to the reduction in benefits earned through lawful economic activity, and penalty cost which is the loss generated by punishment after detection.
When the benefits exceed the cost, criminal will have the tendency of committing a crime. What judicial organs should do is to increase criminals’ expected cost, while direct cost and opportunity cost lie in criminals’ hands, so they can only increase “penalty cost”.

A simple testable hypothesis can be designed like this: in the busy city street, move away all the refuse containers and observe the number of people who throw rubbish everywhere. In the same street, we establish a very striking slogan—“You will be imposed a fine as much as 10,000 dollars if you drop rubbish here.” Then observe people’s behaviors again. There should be a huge improvement because we increase their “penalty cost”.

Submitted by Yuan Tao

Greg Delemeester said...

Tao Yuan: Your answer does not address the main claim of the question. Reread the claim made in the opening paragraph.

Yang Yang said...

From benefit,criminals don't product any goods.Their benefit get from others which means they steal benefit from society.
From cost,The society need to pay a lot of cost for criminals,for example:jail,sue ,opportunity cost(If there are no criminals,Government could use the whole police system to do other thing ) and etc.
May be, both of them are DWL.
In fact, I don't understand the claim,Could you use other way to say it?

Greg Delemeester said...

Yang Yang: Read my comment above. The same applies to your answer.