The Economic Approach to the Optimal Choice of Punishment

The interest of economists in questions of crime and punishment originated largely with the work of Becker (1968). An important objective of that work was the selection of an optimal mix of certainty and severity of punishment. Becker suggested that society should aim to minimise the social losses arising from crime by selecting an appropriate combination of these policy weapons. The resultant socially optimal level of crime was, however, unlikely to be zero, because the detection and prevention of crime involved the use of scarce resources that had alternative uses.1 Policy in this area, as in any other, requires the careful balancing of costs and benefits. The costs of reducing crime have to be compared with the benefits to be derived from doing so. The fact that the optimal level of crime may be positive does not seem to have been always appreciated, certainly in everyday discussions of crime. Section 5.1 of this chapter explores Becker’s model in some detail and presents the principal results arising from that work. Becker argued that an optimal policy would ensure that crime did not pay. In addition he suggested that the optimal fine would be achieved when fines were equated with the harm done by an offence. Section 5.2 discusses some of the main criticisms levelled at Becker’s results concerning the optimal choice of punishment.