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Sensitivity Analyses of the Deterrence Hypothesis: Let's Keep the Econ in Econometrics

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  • Ehrlich, Isaac
  • Liu, Zhiqiang

Abstract

Leamer and McManus applied Extreme Bound Analysis (EBA) in an empirical study of the deterrent effects of capital punishment and other penalties. Their analysis has questioned the validity of the deterrence hypothesis. The thrust of our paper is twofold: first, by applying EBA to well-known econometric models of demand, production, and human-capital investment, our analysis exposes and illustrates the inherent flaws of EBA as a method of deriving valid inferences about model specification. Second, since the analysis shows Leamer and McManus's inferences about deterrence to be based on a flawed methodology, we offer an alternative, theory-based sensitivity analysis of estimated deterrent effects using similar data. Our analysis supports the deterrence hypothesis. More generally, it emphasizes the indispensable role of theory in guiding sensitivity analyses of model specification. Copyright 1999 by the University of Chicago.

Suggested Citation

  • Ehrlich, Isaac & Liu, Zhiqiang, 1999. "Sensitivity Analyses of the Deterrence Hypothesis: Let's Keep the Econ in Econometrics," Journal of Law and Economics, University of Chicago Press, vol. 42(1), pages 455-487, April.
    • Handle: RePEc:ucp:jlawec:v:42:y:1999:i:1:p:455-87
    DOI: 10.1086/467432
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    References listed on IDEAS

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    1. Ehrlich, Isaac & Brower, George D, 1987. "On the Issue of Causality in the Economic Model of Crime and Law Enforcement: Some Theoretical Considerations and Experimental Evidence," American Economic Review, American Economic Association, vol. 77(2), pages 99-106, May.
    2. Davidson, Russell & MacKinnon, James G, 1981. "Several Tests for Model Specification in the Presence of Alternative Hypotheses," Econometrica, Econometric Society, vol. 49(3), pages 781-793, May.
    3. Deravi, M Keivan & Hegji, Charles E & Moberly, H Dean, 1990. "Government Debt and the Demand for Money: An Extreme Bound Analysis," Economic Inquiry, Western Economic Association International, vol. 28(2), pages 390-401, April.
    4. McAleer, Michael & Veall, Michael R, 1989. "How Fragile Are Fragile Inferences? A Re-evaluation of the Deterrent Effect of Capital Punishment," The Review of Economics and Statistics, MIT Press, vol. 71(1), pages 99-106, February.
    5. Jacob A. Mincer, 1974. "Schooling and Earnings," NBER Chapters, in: Schooling, Experience, and Earnings, pages 41-63, National Bureau of Economic Research, Inc.
    6. McAleer, Michael & Pagan, Adrian R & Volker, Paul A, 1985. "What Will Take the Con out of Econometrics?," American Economic Review, American Economic Association, vol. 75(3), pages 293-307, June.
    7. Jacob A. Mincer, 1974. "Schooling, Experience, and Earnings," NBER Books, National Bureau of Economic Research, Inc, number minc74-1.
    8. Isaac Ehrlich, 1996. "Crime, Punishment, and the Market for Offenses," Journal of Economic Perspectives, American Economic Association, vol. 10(1), pages 43-67, Winter.
    9. Ehrlich, Isaac, 1977. "Capital Punishment and Deterrence: Some Further Thoughts and Additional Evidence," Journal of Political Economy, University of Chicago Press, vol. 85(4), pages 741-788, August.
    10. McManus, Walter S, 1985. "Estimates of the Deterrent Effect of Capital Punishment: The Importance of the Researcher's Prior Beliefs," Journal of Political Economy, University of Chicago Press, vol. 93(2), pages 417-425, April.
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    Cited by:

    1. Eide, Erling & Rubin, Paul H. & Shepherd, Joanna M., 2006. "Economics of Crime," Foundations and Trends(R) in Microeconomics, now publishers, vol. 2(3), pages 205-279, December.
    2. Paul R. Zimmerman, 2010. "The Economics of Capital Punishment and Deterrence," Chapters, in: Bruce L. Benson & Paul R. Zimmerman (ed.), Handbook on the Economics of Crime, chapter 16, Edward Elgar Publishing.
    3. Michael D. Makowsky, 2012. "Emergent Extremism In A Multi‐Agent Model Of Religious Clubs," Economic Inquiry, Western Economic Association International, vol. 50(2), pages 327-347, April.
    4. Isaac Ehrlich, 2010. "The Market Model of Crime: A Short Review and New Directions," Chapters, in: Bruce L. Benson & Paul R. Zimmerman (ed.), Handbook on the Economics of Crime, chapter 1, Edward Elgar Publishing.
    5. Joshua D. Angrist & Jörn-Steffen Pischke, 2010. "The Credibility Revolution in Empirical Economics: How Better Research Design Is Taking the Con out of Econometrics," Journal of Economic Perspectives, American Economic Association, vol. 24(2), pages 3-30, Spring.
    6. Ehrlich, Isaac & Saito, Tetsuya, 2010. "Taxing guns vs. taxing crime: An application of the "market for offenses model"," Journal of Policy Modeling, Elsevier, vol. 32(5), pages 670-689, September.
    7. Paresh Kumar Narayan & Russell Smyth, 2006. "Dead man walking: an empirical reassessment of the deterrent effect of capital punishment using the bounds testing approach to cointegration," Applied Economics, Taylor & Francis Journals, vol. 38(17), pages 1975-1989.
    8. Yang, Bijou & Lester, David, 2008. "The deterrent effect of executions: A meta-analysis thirty years after Ehrlich," Journal of Criminal Justice, Elsevier, vol. 36(5), pages 453-460, September.
    9. Gary Mauser & Dennis Maki, 2003. "An evaluation of the 1977 Canadian firearm legislation: robbery involving a firearm," Applied Economics, Taylor & Francis Journals, vol. 35(4), pages 423-436.
    10. Ethan Cohen-Cole & Steven Durlauf & Jeffrey Fagan & Daniel Nagin, 2008. "Model Uncertainty and the Deterrent Effect of Capital Punishment," American Law and Economics Review, American Law and Economics Association, vol. 11(2), pages 335-369.
    11. Naci Mocan & Kaj Gittings, 2010. "The Impact of Incentives on Human Behavior: Can We Make it Disappear? The Case of the Death Penalty," NBER Chapters, in: The Economics of Crime: Lessons For and From Latin America, pages 379-418, National Bureau of Economic Research, Inc.
    12. Berit C. Gerritzen & Gebhard Kirchgässner, 2013. "Facts or Ideology: What Determines the Results of Econometric Estimates of the Deterrence Effect of Death Penalty? A Meta-Analysis," CESifo Working Paper Series 4159, CESifo.
    13. Satya R. Pattnayak, 2006. "Perceived Deterrence in Crime and War," International Studies, , vol. 43(2), pages 119-136, January.
    14. Makowsky, Michael, 2009. "Religious Extremism, Clubs, and Civil Liberties: A Model of Religious Populations," MPRA Paper 14358, University Library of Munich, Germany.
    15. Richard Berk, 2005. "New Claims about Executions and General Deterrence: Déjà Vu All Over Again?," Journal of Empirical Legal Studies, John Wiley & Sons, vol. 2(2), pages 303-330, July.
    16. Joanna M. Shepherd, 2004. "Murders of Passion, Execution Delays, and the Deterrence of Capital Punishment," The Journal of Legal Studies, University of Chicago Press, vol. 33(2), pages 283-321, June.
    17. Jeffrey D. Kubik & John R. Moran, 2001. "Lethal Elections: Gubernatorial Politics and the Timing of Executions," Center for Policy Research Working Papers 40, Center for Policy Research, Maxwell School, Syracuse University.
    18. Berit C. Gerritzen & Gebhard Kirchgässner, 2013. "Facts or Ideology: What Determines the Results of Econometric Estimates of the Deterrence Effect of Death Penalty?," CREMA Working Paper Series 2013-04, Center for Research in Economics, Management and the Arts (CREMA).

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