Handbook on the Economics of Crime
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Handbook on the Economics of Crime

Edited by Bruce L. Benson and Paul R. Zimmerman

While few economists analyzed criminal behaviour and the criminal justice process before Gary Becker’s seminal 1968 paper, an enormous body of economic research on crime has since been produced. This insightful and comprehensive Handbook reviews and extends much of this important resulting research.
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Chapter 4: Dynamic Perspectives on Crime

Justin McCrary


1 Justin McCrary INTRODUCTION Economists seeking to understand how crime might respond to policy interventions typically turn to the model of crime due to Becker (1968). In this model, crime is viewed as a point-in-time bet, and crime occurs when the expected utility of taking the bet is greater than the expected utility of turning it down. Another workhorse of the economic analysis of crime is the static time allocation model of Gronau (1977). This model has been adapted by several authors, including Grogger (1998), Lemieux et al. (1994) and Williams and Sickles (2002). The models of Becker and Gronau are static, in the sense that there is no explicit reference to the future consequences of apprehension. Static models of criminal labor supply lead to important insights in many contexts, but can be awkward in contexts where dynamics are important. As one example, crimes with the greatest social costs are serious property and violent crimes. In every modern society, these crimes are punished by lengthy prison sentences rather than fines or instantaneous physical punishment. Thus the disutility associated with apprehension for the most important crimes is experienced many periods after the utility gain associated with commitment of the crime. A second example of the importance of dynamic considerations pertains to intertemporal substitution of criminal activity. Over the last decade or so, a consensus has emerged in criminology that ‘hot spots policing’ – i.e. a massive increase in police presence within a geographically small area of a city where criminal activity has...

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