Principles and Standards for Benefit–Cost Analysis

Principles and Standards for Benefit–Cost Analysis

Edited by Scott O. Farrow and Richard Zerbe, Jr.

Benefit–cost analysis informs which policies or programs most benefit society when implemented by governments and institutions around the world. This volume brings together leading researchers and practitioners to recommend strategies and standards to improve the consistency and credibility of such analyses, assisting analysts of all types in achieving a greater uniformity of practice.

Chapter 4: Principles and standards for the benefit–cost analysis of crime

John R. Lott Jr.

Subjects: economics and finance, public sector economics, valuation

Extract

Criminal justice involves many trade-offs. Are we spending enough on police? What are the levels of penalties for different crimes? Are there trade-offs between different types of penalties? For example, does greater reliance on criminal penalties reduce the reliance on reputational penalties? One complicated example is the death penalty. There is still some debate over the deterrence effect of the death penalty. But even if one accepts that such deterrence exists, how large does that effect have to be to outweigh the costs? The legal process for the death penalty is costly. What are the costs of accidentally convicting innocent individuals? The death penalty might save imprisonment costs after a certain point, but executions are so delayed that the present value of those costs might be small. Numbers cannot easily be assigned to all these costs and benefits, but it is still possible to give examples of how large different values have to be for people to change their decisions on whether the death penalty passes a benefit–cost-type test.

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