Economics of Crime

Economic principles can explain every part of the criminal justice system. Laws create incentives for people to act in certain ways. Many criminals choose illegal activities when legal options are available. The hidden cost of crime for the society is the resources spent on its prevention. This course will examine decisions by potential criminals; full costs of crime and punishment; allocation of criminal justice resources and some public policies, such as drug legalization, death penalty, private prisons, gun control, and intellectual property rights. Basic economics concepts will be introduced: opportunity costs, supply and demand, market equilibrium, externalities.  This course is based on online materials. Suggested schedule: one HW per week to meet the term-end deadline.

Textbook in pdf : Winter, Economics of Crime

Module topic, study links, homeworks

1.  Crime statistics and economics 

Crime data sources – find any stats here:


2. Rational criminals 


3.  Illegal markets and efficient fines


4.   Deterrence and full burden of crime


5.   Death penalty and private deterrence


6.  Race and social reforms 


7.   Drugs


 8.  Technology and crime


Final project (6-7 pages)

The goal of this research assignment is to develop expertise in some narrow issue within economics of crime. Using online resources in this course and your own sources, research one of the controversial public policy issues in criminal justice.   Try to answer some of the questions below. To strengthen your project, research 3-4 recent published articles by economists on a topic of your choice and describe their findings.  Use JSTOR article database on ESC library site, choose ‘Economics’ and your keywords in advanced search.

  • Why is this an important issue?  Record several interesting numbers (related arrests, affected parties, size / structure of the market, parties affected by the law, spending on enforcement or something else)
  • Identify a controversial issue. Describe both sides of the debate.
  • What’s wrong with the current state of affairs?
  • If a particular law related to this issue is passed, what are the benefits and who receives them? what are the costs and who bears them?
  • Given your own assessment of costs and benefits, how should the issue be resolved?
  • What alternative public policies would you suggest if the proposed law is not feasible or not desirable? Explain.

Examples of topics:

  • Research a specific problem or injustice in our criminal justice system.
  • Lessons from drug legalization in Colorado or another state, or a different country (Portugal).
  • How do terrorists finance their operations?   The Atlantic has some links in this article.
  • Why is crime so high in Latin America? –
  • What has been the experience of US states with legalized marijuana?
  • How can we improve the cost-effectiveness of prisons? or police?
  • Does education of prisoners reduce recidivism?
  • Is Racial Profiling an Acceptable Law Enforcement Strategy?
  • Should prostitution be legalized?
  • Based on the experience of any other country with decriminalization of hard drug(s) – has decriminalization resulted in more and less crime?
  • What do we know about labor market outcomes for individuals with criminal records?

Alternatively, your final project may be a reaction paper to a book. Choose your own book and get it approved, or use one of these:

Questions for the reaction paper

  1. Summarize the story.
  2. What is the author’s main message? What central questions is the author trying to answer?
  3. Why is this issue important? Give examples, numbers and quotes to illustrate your point.
  4. What interesting facts have you learned?  What types of crime are described in the story?
  5. What part of the issue is controversial?  Why?  What is your stand on the controversial issue(s)?
  6. How can the society set up incentives to reduce these types of crimes?
  7. You may choose to discuss in detail one salient aspect of the policing/punishment system that needs improvement, as illustrates in the book/film.
  8. How is the issue raised in the book relevant today?  What current news and events illustrate its importance? Do your own mini internet research on this topic. Use examples, numbers, and quote your sources.

Research resources to help you find and develop topic for your project:

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