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SEMINARIO CEA-MIPP/ Rodrigo Soares (INSPER)

Hora: 13:30 PM Santiago.

Dónde: Sala Consejo (401) – Beauchef 851, piso 4 | Departamento de Ingeniería Industrial.

Tema: “Socially Optimal Crime and Punishment” (Rodrigo Soares and Eduardo Ferraz)

Speaker: Rodrigo Soares (INSPER)

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Abstract

This paper develops a dynamic equilibrium model of crime with heterogeneous agents and human capital accumulation. Agents decide whether to commit crimes by comparing potential gains with the expected punishment. Public security policies are defined as pairs of a size of the police force and an average sentence length. We propose a micro-founded public security technology linking expenditures on police to the probability of apprehension of a criminal. We illustrate the relevance of this theoretical framework by using an estimated version of the model using US data to: (i) characterize the socially optimal public security policy; (ii) explore potential complementarities across public security and educational policies; and (iii) show that comparative statics exercises often lead, under reasonable parameter values, to recommendations that differ from those obtained in a global optimality analysis. These results highlight the relevance of equilibrium considerations in the economic analysis of crime. The paper gives a methodological first step towards building a manageable model of crime that can bring together different pieces of evidence —and equilibrium considerations— when evaluating the trade-offs across policy alternatives.