Three essays on the economics of crime
Boston University, Ann Arbor, Ph.D., (2006)(ISSP).Abstract
The central theme of this dissertation relates to economic aspects of criminal activities and their welfare consequences. The issues addressed from theoretical and empirical perspectives are: the effect of gun control on reducing crime, the effect of kidnapping on migration outflows, and the effect of criminal sanctions on crime rates. The first chapter studies crime and gun control as price regulations on gun sales. In the gun control debate there are two opposing sides: pro-control advocates argue that restricting the amount of guns inevitably reduces gun violence while anti-control advocates argue that gun control disarms law-abiding citizens rather than gun predators. A model is constructed which explains the basis for either argument. It is shown that under certain parameter values, gun control backfires as it increases gun-carrying costs for armed non-predators more than for gun predators. Under other parametric circumstances, gun control disarms both predators and armed non-predators as it increases the costs for both groups in tandem. The second chapter studies the effect of kidnap risks on household migration decisions using data from four major cities of Colombia. The main result is that high kidnap risks induce migration from urban households to an international destination. Positive selection seems to be occurring in this migration flow: kidnap victims tend to have above-average education and incomes compared to the rest of the urban population. The third chapter studies the interplay between economic incentives and social norms where derivations from norms are assumed to result in feelings of guilt or shame. The intensity of these feelings is endogenous they are stronger when the population fraction obeying the norm is larger. As a consequence, a gradual reduction of the sanctions against criminal activity may weaken the social norm against crime. It is shown that there can be multiple self-fulfilling norms; hence such gradual changes in policy may induce a discontinuous increase in the crime rate. Political equilibrium is also discussed under majority rule and it is shown how a majority of individuals, who feel no guilt or shame from violating the law, can exploit a minority who do have such feelings.