Economists’ Contribution to the Study of Crime and the Criminal Justice System

This essay provides an analytic synthesis of the contribution by economists to the study of crime and the criminal justice system. We begin by summarizing the distinctive features of the economic approach, namely a focus on rational self-seeking behavior and analysis of the consequences of interactions among groups of actors that create equilibria in a system. We then use a taxonomy suggested by Ronald Coase to divide the economists’ contributions into three main areas of theory, technique and substantive expertise. With respect to theory, economists’ work on perceptual deterrence, with its emphasis on the centrality of time discounting, has already been incorporated into criminological research. There has been a much more mixed record in taking up economic approaches to study of the criminal justice theory; early work on prosecutors has been neglected, while the newer area of outcome analysis, based on maximizing behavior by criminal justice actors, has influenced criminological work on discrimination. With respect to technique, there is also a mixed record. The specialized statistical methods of econometrics, particularly Heckman’s approaches to problems of selection, have been influential but often mishandled. Cost-benefit analysis of the criminal justice system, though much sought after by policy makers, has not entered mainstream criminology. We then turn to one substantive area where economists have substantive expertise, namely illegal markets, especially drug markets. Since markets are central to economists’ thinking, the little research that has been done on this important criminal phenomenon has been done primarily by economists. They have produced some important findings on the effects of criminal justice interventions on major outcomes such as price and quantity that might be usefully incorporated into criminological research. The final section argues that criminology can benefit from collaboration with economics but need not worry that the economists will dominate the field.