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Crime can be a Giffen Good: The Role of Need in Criminal Labor Supply

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  • W. Bentley MacLeod

Abstract

Building upon the Becker (1968)-Ehrlich (1973) model of crime, this paper shows that under the appropriate conditions crime is a Giffen good: increasing deterrence can lead to an increase in crime. This result relies upon two conditions. The first is that individuals are choosing between how much time to allocate between leisure and crime as an income earning activity. Second, in the absence of income from criminal activity, individuals do not have access to sufficient resources to fund necessary consumption. Evidence consistent with this hypothesis is discussed. This in turn may provide an additional reason why crime reduction is so challenging. The optimal policy is derived, and it is shown that it entails a combination of redistribution and an appropriately set level of deterrence that varies with the level of social inequality.

Suggested Citation

  • W. Bentley MacLeod, 2023. "Crime can be a Giffen Good: The Role of Need in Criminal Labor Supply," NBER Working Papers 31786, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:31786
    Note: LE LS
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    More about this item

    JEL classification:

    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • K14 - Law and Economics - - Basic Areas of Law - - - Criminal Law
    • K40 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - General

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