New Horizons in Law and Economics series
Edited by Alain Marciano and Jean-Michel Josselin
Chapter 6: The economics of harmonizing law enforcement
Nuno Garoupa 6.1 INTRODUCTION The economic analysis of crime and criminal law is now a well-established field within the economic analysis of law. If the large body of literature surveyed by Garoupa (1997a) and Polinsky and Shavell (2000b) is not sufficient demonstration, a quick look at the current textbooks of law and economics justifies the observation. The proposition that crime rates respond to risks and benefits is called the deterrence hypothesis. It is an application of the theory of demand to one of the most important issues in criminal justice. The hypothesis asserts that people respond significantly to the incentives created by the criminal justice system. If so, increasing the resources that society devotes to the arrest, conviction and punishment of criminals will reduce the amount, and social costs, of crime. As many scholars note, there is a competing hypothesis that holds that criminals are not deterred by variations in the certainty and severity of punishment. Rather, this hypothesis holds that crime is caused by a complex set of socio-economic and biological factors, and that the appropriate way to reduce the amount of crime and thus lower the costs of crime is to divert resources into channels that attack these root causes of crime. Although recent public debate has tended to frame these two hypotheses as mutually exclusive, we argue that it is more sensible to view them as complementary in which case the optimal public policy for reducing crime may be a mix of deterrence and policies directed at...
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