Econ of Crime HWs

Give your best  detailed answers to any 6 questions in each module. An excellent answer should mention readings, own examples, facts, numbers.  Short and incomplete answers earn partial credit. Some questions are based on the textbook chapters, and some are on online resources.

Homework 1   Answer any 6 questions 

1.  Study Crime Statistics using links on the course webpage.  What are the main sources of US crime statistics?  Record 5 recent numbers that you consider important for understanding the current crime and punishment situation in the US.  These can be murder rate, arrests, incarceration rate, expenditure on criminal justice, etc. Briefly explain what each number represents and what source it comes from.

2.  Does crime rates vary by state?  Which states have the highest and lowest crime rates?  Explain why it is more appropriate to use crime rates rather than crime counts when comparing states or cities.

3.  How does US compare to other countries in terms of crime (use several indicators, such as murders per capita, police per capita, number of prisoners) ?

4. Based on this module and on your prior knowledge, what are some of the explanations for why so many Americans are in prison?

5.  What are some examples of behavior that at one time were  crimes that are no longer criminal?  What are the examples of behavior that were not crimes that are now crimes?

6. Opportunity cost is the next best alternative. What might be the opportunity cost of the following decisions:

  • a. You taking this course.
  • b. A 25-year-old steals a car and spends a year in jail.
  • c. A 25-year-old steals a car from someone they know and like.
  • d. Local government decides to hire 10 more police officers.

7. The central assumption of economic theory is that humans are rational.  Rational people make choices by comparing costs and benefits of various alternatives and selecting the one with the highest net benefits. Give one example of a cost and benefit decision you made recently.  Compare costs and benefits. Are you a rational person?


Homework 2            Answer any 6 questions 

  1. Explain why from a society’s standpoint optimal crime rates are above zero.

2. Based on ch1 of the textbook, explain the concept of an ‘efficient crime’ with examples.

3. Explain the concept of ‘rational criminal’.  What evidence would you present in support of the statement that criminals make rational decisions? Are criminals rational?

4.  What are some of the conclusions from empirical studies regarding variables that influence crime rates?  Describe 5 variables that have been shown to affect crime rates.

5.  How can incentives be used to reduce crime by increasing the cost of a crime or reducing its benefits?  Give examples of such actions by a potential victim or by the government (from Friedman’s book chapter or the law textbook chapter).

6.  A trip to Las Vegas would cost me $200.  There is a 5% chance that I will win $10,000 and a 95% chance that I will lose $300.  Calculate expected gain or loss, do the cost-benefit analysis and help me decide:  Should I take the trip? Hint: yes, if expected benefit is higher than expected cost.

7.  Suppose a thief stole a car valued at $20,000 from your neighbor’s driveway. The thief spent $100 on tools in preparation for his act. During the day the thief works as a laborer and earns $20,000/year. The thief understands that the probability of being caught is 10%, in which case he will spend $2,000 on court fees and 6 months in jail.  What are the benefits and the costs of this crime for the thief?  Is this thief a rational criminal? (compare costs and benefits; do benefits exceed costs?) .  Suggest a prevention policy or strategy that could change the thief’s cost-benefit decision to steal a car.  Remember that a good policy should either reduce benefits or increase costs for the criminal.

8. From the point of view of a student, consider costs and benefits of cheating. You are deciding whether to buy a final research paper for this course online, or write your own original paper.  Describe your benefits of buying a paper, and your immediate and potential costs. Compare the benefits and costs in term of money.  What factors make students cheat more?  How can a school encourage good behavior and discourage this kind of cheating?


Homework 3    Answer any 6 questions 

  1. Based on ch2 of the textbook, discuss the pros and cons of setting a fine for speeding at $50,000 with 1% probability of being caught.  Explain the trade-off between the certainty and severity of punishment in setting the optimal level of expected punishment.

2. Based on ch2, what are the advantages and disadvantages of shaming as punishment?

3. Consider two expected penalties for cheating on exams: (1) cheaters are caught 50% chance of the time, and when caught, the cheating student earns an F on the exam or (2) cheaters are caught only 1% of the time, but when they are caught, the cheaters are expelled with a permanent mark on their record.  Would a low certainty/high severity penalty combination achieve the same deterrence as a high certainty/low severity combination? Share your thoughts. Is your conclusion consistent with the majority of empirical studies that suggest that the deterrent effect of the certainty of punishment far outweighs the deterrent effect of the severity of punishment?

4. Explain the broken windows fallacy.

5.  According to a study by Levitt, explain what factors account for declining rates of criminal activity since 1970s.

Use your knowledge of supply and demand to answer the remaining questions. Predict what will happen to prices and quantities sold/bought in each case.  Start by drawing a graph that shows an X-shaped intersection of supply and demand P0 Q0 in the corresponding market before the event. After the event, one of the curves, either Supply curve of sellers or the Demand curve of buyers, moves left or right resulting in the new equilibrium P1 and Q1. Draw the new curve, label your graph. Correct answers without graphs will earn half-credit.

6. Suppose that market for marijuana is legalized leading to higher supply and no change in demand. How will this legalization affect the amount of marijuana sold and its price? Include graph.

7. Suppose there in an increase in burglary crimes in your town. If nothing else changes, what will happen to insurance rates and the number of insurance contracts sold? Include graph.

8. Suppose crime rates drop sharply in the US. What will happen to price and sales in the market for security equipment?Include graph.

9. The State of Nevada, where prostitution is legal, imposes licensing rules that require the prostitutes to obtain an annual license at a cost of $10,000. What will happen to the price and quantity of services? Include graph.


Homework 4                  Answer any 6 questions 

1. Based on ch 3, explain the deterrent effect and the incapacitation effects of prisons. What implications do these effects have for determining the optimal prison sentence?

2. In ch 3, the author states: ‘if it is desirable to maintain an equal level of expected punishment for an identical crime, equal conviction rates and equal prison sentences for the wealthy and poor may not achieve that goal.’  Explain the logic behind this claim.

3. Based on ch 3, discuss one of the empirical findings related to juveniles, quality of life or substitute crimes.

4. Based on ch 3, what at the pros and cons of privatization of corrections?

5.  Give examples of activities that generates positive and negative externalities. Explain how incentives can be used to encourage or discourage these activities.

6.  When a car is stolen, from the society‘s perspective this is simply an involuntary transfer from one person to another. Overall the society is neither worse off nor better off. True or false?  What additional costs does a victimless crime like theft impose on society?

7. Explain how an increase in crime can create a multiplier effect that creates even more crime.  Use this crime multiplier effect to explain the continued violence in Colombia.

8. Explain why economists are unsympathetic to the claim that “life is priceless.”  Describe a circumstance in which policymakers must decide how much a life is worth.


Homework 5                  Answer any 6 questions 

1. Based on ch4, offer economic arguments in support of death penalty. Mention empirical evidence in your answer.

2. Based on ch4, offer economic arguments against death penalty. Mention empirical evidence in your answer.

3. Based on ch6, explain the difference between observable and unobservable security measures, with examples, and comment on their relative effectiveness.

4. Based on ch6, explain evidence regarding the link between gun ownership and crime.

5. Based on ch6, explain the analogy between crime and disease, and how it may be useful in designing public policies.

6. Explain the debate over gun laws in this country. What are the arguments of pro-gun and anti-gun groups?

7. What is meant by ‘prison industrial complex’?  Describe its structure, features and its size.

8. Read David Friedman, “Why Not Hang Them All: The Virtues of Inefficient Punishment,” JPE 1999.  Summarize the author’s main ideas and conclusions.


Homework 6          Answer any 6 questions 

1 .Based on ch5, what have we learned about racial profiling from empirical literature?

2 .Based on ch5, what have we learned about discrimination in sentencing and bail?

3. Based on ch5, does allowing employers easy access to criminal background checks improve or worsen the labor market prospects of minority workers?

4. Based on ch8, explain the link between unemployment and crime. What social policy would you suggest to improve the situation?

5. Based on ch8 and online readings, what are some of the examples of program that can help prisoners reintegrate into the society?

6. Based on ch8, what do we know about juvenile crime and how to reduce it?

7. Discuss the role of education and schools in reducing crime.

8. Discuss “three strikes and you are out” laws and their impact.


Homework 7    Answer any 6 questions 

  1. Based on ch7, explain why it is difficult to justify social control of addictive substances to protect individuals from themselves.

2. Based on ch7, what kind of external costs does drug abuse create?

3.  Based on ch7 and online resources, explain with examples supply- and demand-oriented drug policies.  Are these policies effective?

4. Based on ch7, what do we know about the costs of drug policies?

5. Watch the TED talk about the drug cartels.  Describe the business model of a cartel.  Can you suggest a policy that may help diminish the power of a cartel?

6. Why do crack dealers still live with their mothers?

7. Read an article on drug trading gangs by Levitt and Venkatesh. Summarize the main question and conclusion. What have you learned from this article?

8.  Explain why there are reasons to believe that criminal justice resource are not efficiently allocated in this country.


Homework 8   Answer any 6 questions 

1.  Listen to 2 TED talks about international crime networks. Describe what kind of activities the networks are engaged in. What is the connection between money laundering and the US Patriot Act?

2. Review the FBI Financial Crime Report and explain the main types of  financial crimes.  What may have caused the increase in these crimes?

3. Use the Antiphishing website to research what types of illegal online activities are on the rise. How do these activities harm citizens and businesses?

4. Watch presentations by Goodman and Kaku about the crimes of the future. What types of crimes will become possible with new technology?

5. Listen to 2 presentations by Dan Ariely.  To what extent are people dishonest?  What influences our moral code?

6. Browse through the DOJ Antitrust Division website. Why was this agency created? What types of behavior by companies is illegal?  Give examples and explain who benefits and who is hurt by these activities.

7. What is intellectual property and why is it a crime to steal it?  Why is this issue controversial?

8. (based on Gilbert’s TED talk) Explain why rational people can make bad decisions.

9.  Give an example of technology making it easier to commit a crime and an example of technology helping to prevent a crime.


Leave a Reply

Your email address will not be published. Required fields are marked *