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Summary of Week 1

In this first week of the course, we looked at how economists view crime as the result of an individual’s rational choice.

Under the rational choice framework, individuals compare the gains and costs from committing crime with the gains and costs from not committing crime, and choose to offend when the net gains from committing crime are greater than the net gains from not committing crime. The rational choice framework may appear a bit too simplistic, but it can be easily extended to incorporate other relevant factors, such as non-monetary gains and losses from crime.

Economists use the rational choice framework to better understand and predict criminal behavior. For example, crime would fall when the number of police officers increases because the probability of punishment is now higher. During the times of economic difficulties, more individuals would commit crime because the potential gains from crime would become higher relative to the potential gains from working for legitimate jobs.

We also learned about efficient crime-fighting policies. Just like a rational consumer who has to choose the best consumption bundle given his limited budget, we should look for the optimal bundle of public policies given the limited public resource. Ideally, we would like to reach a point where an additional dollar spent on crime control generates the same amount of social gains as an additional dollar spent on other policy objectives. Although it is very much difficult to identify this golden portfolio in real life, it is clear that spending too much or too little on crime-control will lead to an inefficient allocation of public resource.

We also saw where to find data on crimes and criminals in the United States. It has become a lot easier to obtain high-quality crime data online, and you should check to see whether and where you can find good crime data for your neighborhood, city, and country. In later weeks, we will spend more time learning about various data analysis techniques, but finding good data is always the first step in any successful empirical research.

Next week, we will examine a crime trend in the United States in the past few decades and see how economists explain the historic crime drop in the 1990s using the rational choice framework.

I hope you enjoyed the first week of the course. See you next week.

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This article is from the free online course:

Economics of Crime

Hanyang University

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