Research Handbook on the Economics of Criminal Law

Research Handbook on the Economics of Criminal Law

Research Handbooks in Law and Economics series

Edited by Alon Harel and Keith N. Hylton

Jeremy Bentham and Gary Becker established the tradition of analyzing criminal law in utilitarian and economic terms. This seminal book continues that tradition with specially commissioned, original papers that span the philosophical foundations of the use of economics in criminal law, both traditional economic perspectives and behavioral and experimental approaches to the discipline.

Chapter 5: Wealth Redistribution and the Social Costs of Crime and Law Enforcement

Avraham D. Tabbach

Subjects: economics and finance, law and economics, law - academic, criminal law and justice, law and economics


Avraham D. Tabbach* 1. INTRODUCTION Redistributing wealth from the rich to the poor is an exercise in balancing marginal social costs and benefits. The social benefits derive from the idea that people have decreasing marginal utilities of wealth (poor individuals value the marginal dollar more than do rich individuals) or that the social welfare function exhibits aversion to inequality (individuals in a given society tend to prefer equality). The social costs involved are associated with the administration of the wealth redistribution and the use of distortionary, rather than lump sum, taxes. This chapter argues that redistribution generates additional social benefits or costs of a completely different kind, namely, its impact on the social costs of crime and law enforcement. I show that, in a broad range/set of circumstances, redistribution reduces these costs and (back-of-the-envelope calculations suggest) to a significant extent. This serves as an additional justification for progressive taxation, indicating that the scope of redistribution should be greater than what is usually recommended in the public finance literature. The kernel of the argument put forth here is grounded in the notion that it is generally cheaper to enforce the law on the rich than on the poor, for two cumulative reasons: first, because monetary sanctions are less costly than enforcement efforts in achieving any particular level of deterrence, and, second, because, for obvious reasons, monetary sanctions cannot exceed offenders’ level of wealth. Thus, the greater offenders’ level of wealth, more deterrence can be achieved at no additional cost or the...

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