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Rewards versus Imprisonment

Author

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  • Murat C Mungan

Abstract

This article considers the possibility of simultaneously reducing crime, prison sentences, and the tax burden of financing the criminal justice system by introducing rewards, which operate by increasing quality of life outside of prison. Specifically, it proposes a procedure wherein a part of the imprisonment budget is redirected towards financing rewards. The feasibility of this procedure depends on how effectively the marginal imprisonment sentence reduces crime, the crime rate, the effectiveness of rewards, and how accurately the government can direct rewards towards individuals who are most responsive to such policies. A related welfare analysis reveals an advantage of rewards: they operate by transferring or creating wealth, whereas imprisonment destroys wealth. Thus, the conditions under which rewards are optimal are broader than those under which they can be used to jointly reduce crime, sentences, and taxes. With an exogenous [resp. endogenous] budget for law enforcement, it is optimal to use rewards when the imprisonment elasticity of crime is small [resp. the marginal cost of public funds is not high]. These conditions hold, implying that using rewards is optimal, in numerical examples generated by using estimates for key values from the empirical literature.

Suggested Citation

  • Murat C Mungan, 2021. "Rewards versus Imprisonment," American Law and Economics Review, American Law and Economics Association, vol. 23(2), pages 432-480.
    • Handle: RePEc:oup:amlawe:v:23:y:2021:i:2:p:432-480.
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    File URL: http://hdl.handle.net/10.1093/aler/ahab011
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    Citations

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    Cited by:

    1. Feess, Eberhard & Sarel, Roee, 2022. "Optimal fine reductions for self-reporting: The impact of loss aversion," International Review of Law and Economics, Elsevier, vol. 70(C).
    2. Gilles Grolleau & Murat Mungan & Naoufel Mzoughi, 2022. "Letting Offenders Choose Their Own Punishment ?," Post-Print hal-03694337, HAL.
    3. Doménech-Pascual, Gabriel & Jiménez, Juan Luis, 2024. "Changes in damages when liability rules change: an empirical study on compensation for the time spent in pretrial detention," International Review of Law and Economics, Elsevier, vol. 78(C).
    4. Erkmen G. Aslim & Murat C. Mungan & Han Yu, 2024. "A welfare analysis of Medicaid and recidivism," Health Economics, John Wiley & Sons, Ltd., vol. 33(11), pages 2463-2507, November.
    5. Gilles Grolleau & Murat C. Mungan & Naoufel Mzoughi, 2022. "Letting offenders choose their punishment?," Kyklos, Wiley Blackwell, vol. 75(4), pages 607-617, November.
    6. Jef De Mot & Murat C. Mungan, 2024. "Whistle‐blowing and the incentive to hire," Economic Inquiry, Western Economic Association International, vol. 62(3), pages 1292-1308, July.

    More about this item

    Keywords

    K00; K14; K42;
    All these keywords.

    JEL classification:

    • K00 - Law and Economics - - General - - - General (including Data Sources and Description)
    • K14 - Law and Economics - - Basic Areas of Law - - - Criminal Law
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

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