Econometric Principles Best Policies to Reduce the Incidence of Crime

The causes of crime, and the best policies to reduce the incidence of crime, are matters of considerable debate. From an economic perspective, the perceived probability of being convicted if arrested, and the expected length of a resulting prison sentence, are two factors that might be expected to have an impact on the incidence of crime. If income has diminishing marginal utility, then having a low income may also contribute to the probability that an individual will offend. However, the microeconomic models that generate these propositions assume that the individual is rational. An alternative view is that the relevant individuals are not capable of properly assessing risky future events, and that increased conviction rates and longer prison sentences would have little impact on their behaviour, other than to remove them from general society for a period of time. Unfortunately, datasets that might shed light on these issues are rare. The dataset contains data on men whose first adult arrest in California occurred after 1972. Their arrest records from the California Department of Justice have been merged with official earnings records from the California Employment Development Department on the basis of social security number, to provide a dataset that contains information on both income-related variables and variables related to arrest, conviction and imprisonment. The binary variable arr86 takes a value of 1 if the individual was arrested in 1986 and 0 otherwise. This will be taken as a measure of whether or not the individual engaged in criminal activity in 1986. The variable pcnv is the proportion of previous arrests that resulted in a conviction. This will be taken as a measure of the individual's judgement of the probability of being convicted. The variable avgsen is the average length of prison sentence served by the individual for their previous convictions. This may be used as a measure of the expected prison sentence if convicted. The dataset also contains other variables that may be relevant, including variables measuring the income and employment of the individual. Use this dataset, and techniques you have learned in ECON232, to investigate the factors that are related to the probability that an individual commits a crime. Of particular interest are the following questions: ? Are longer prison sentences likely to reduce the incidence of crime? ? Are policies that increase the probability of arrest (e.g. more police patrols) likely to reduce the incidence of crime? ? Are higher employment rates likely to reduce the incidence of crime? ? Are improved income support schemes (e.g. higher social security payments) likely to reduce the incidence of crime?              

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