Transcript jobsandcrime09 (2)

Jobs and Crime
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Week One: Tuesday & Thursday
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Summary for Lecture Two

Crime is an economic problem
 loss
of resources(dead weight loss) from private
and public defense (graphical economic analysis)

Damages to victims are 3 times as high for
crimes against persons compared to crimes
against property
 Total
for 7 FBI Index Crimes: $ 95 Billion (93 $)
Shouldn’t society focus more on big ticket fraud: Enron,
WorldCom, Bernard Madoff Investment Securities LLC?
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Today
Policy Issue: Gun Laws
 Seriousness ratings for ten behaviors

 How
much would you pay to prevent your bike
being stolen?

Experimental issue: Do economic
conditions cause crime?
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How to study for this course!

Lecture course: go to lectures





No section and no TA
Look at outline slide at the beginning of each lecture with
the major points and a summary slide at the end of each
PowerPoint with the major points
Be familiar with the graphical analysis in the class notes &
the PowerPoints
Look at last Winter’s (2011) midterm for clues
Read (listen, look, Google) the news and keep up with
criminal justice system stories
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Example:Summary for Lecture Two

Crime is an economic problem
 loss
of resources(dead weight loss) from private
and public defense

Damages to victims are 3 times as high for
crimes against persons compared to crimes
against property
 Total
for 7 FBI Index Crimes: $ 95 Billion (93 $)
Shouldn’t society focus more on big ticket fraud: Enron,
WorldCom, Bernard Madoff Investment Securities LLC?
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Example: Outline and Issues for Lecture Two
Course logistics: gauchospace
 Criminal Justice System (CJS) & economic
paradigm: where do the values (prices) come
from to evaluate the states (outcomes) of the
CJS?
 How much crime is there? How do we know?
 Crime has two effects:

 Redistribution
of welfare from the victim to the
perpetrator
 Opportunity cost or waste of resources for defense
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The Graphics of Total Cost, TC
TC = r*OF + E
Total Cost (E)
$
Economic Paradigm
1. Choose objective
e. g. minimize sum of
damages to victims plus
expenditures, E, on CJS
2. Describe states of the world
(options for choice)
Total cost curve (E)
Minimum Cost
3. Choose the best option
Optimal Expenditure
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E on CJS
8
8
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Midterm
I. 40
II. 20
III. 40
IV. 50
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Stories still in the news

Congresswoman Gabrielle Giffords
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What is the gun law in Arizona?
Q: Is there a waiting period on gun sales?
 Q: Are handgun buyers required to
complete safety training?
 Q: Is it required that you register all of your
guns with law enforcement?
 Q: Are background checks required at gun
shows?
 Q: Do state police and federal NICS
perform a background check?

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What is the gun law in Arizona?
Q: Is it mandatory that locking devices be
sold with guns?
 Q: Is a license or permit required to buy
handguns?
 Q: Are background checks required on
'private' gun sales?
 Q: Are there any restrictions regarding
minors possessing guns?
 Q: May the police limit carrying concealed
handguns?

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A theme for this course

US and CA criminal justice systems will be
case studies, but are there larger issues about
the public sector?
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Public Sector
Health
Safety
Civics
Education
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What determines the quality of life in a
nation, a state or a locality?

The distribution of GDP between the public
and private sectors?
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Total Tax Burden As % of GDP, 2004
Google Forbes overall tax burden
Country
Sweden
France
UK
Germany
Canada
Switzerland
USA
Mexico
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Total Tax burden
50.7%
43.7
36.1
34.8
33.0
29.4
25.5
18.5
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Public Vs. Private Goods
Labor for
Private Goods
Production Function
Contraint
Private
Goods
Labor for
Public Goods
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Labor, Private
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Output, Private
Production Possibility Frontier
L, Private
Output, Public
L, public
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Output, Private
Production Possibility Frontier
L, Private
Output, Public
L, public
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Private
Mexico
US Canada
UK
Sweden
Public
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Production Possibility Frontier
PRIVATE
Inefficient
Does the global economy
Cause a bias towards
Private instead of public
Goods and services?
PUBLIC
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Production Possibility Frontier
Public Goods:
Defense
Inefficient
Does being the world’s
Policeman cause a bias
Away from other public
Goods and services?
Public Goods: Health
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Expenditures Per Pupil
Fiscal
Year
70-71 80-81 90-91
00-01 03-04
05-06
CA
Rank
14
19
28
25
28
35
Nominal 902
$, CA
2438
4595
6986
7673
8607
US
2307
4902
7373
8310
9576
842
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Production Possibility Frontier
Public Goods:
Prison
Operation
Inefficient
Which would you rather
do (1) keep the 30% of
state prisoners who are
pot-heads locked up, or
(2) educate your kids?
Public Goods: education
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US Politics
“It’s the economy stupid!”
 Issues in 2008, 2009, 2010, & 2011

 Human
capital and education
 The family and social conservatives
I will argue that the issues of family and education are connected
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7.2%
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29.6%
35
5.8%
7.2/5.8 ~ 26% rise
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33.8%
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The Economy and Crime
Is crime affected by the business cycle?
 Do economic factors cause crime?

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www.econsnapshot.wordpress.com
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Where is the economy headed?
Survey of Professional Forecasters
http://www.phil.frb.org/files/spf/survq407.h
tml
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The forecasters can be wrong!

A day late and a dollar short
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California Forecasts & Record:
Umemployment rate: CA Dept. of Finance
Year
2004
2005
2006
2007
2008
2009
2010
CA
6.2%
5.4%
4.9%
5.3%
5.7%
5.6%
5.5%
US
5.5%
5.1%
4.6%
4.6%
5.0%
5.0%
4.8%
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Jobs and Crime
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Questions About Crime
Does the Business Cycle Affect Crime
Rates?
 Does an Individual’s Life Cycle Affect
Crime Rates?
 Why do some people live socially
unproductive lives?
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Two Points About Economic
Conditions and Crime

Relationship of Crime to the Business Cycle
 Short
Run: Business Cycle
 Is Phil Cook wrong?
 California: the misery index and crime
 misery

index = unemployment rate + inflation rate
Relationship of Crime to the Life Cycle
 Long
Run
 Investment in Education
 Role of the Family
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Why do people work in labor market?
Tastes?
 Assume everybody has the same tastes!
 Human capital: earning power

 Education
 Work
experience
 Health
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An Individual’s Life Cycle for a
Socially Productive Life
Learning over the life cycle
 Accumulating earning power or human
capital
 Earnings depend upon

 ability
 knowledge
 work
experience
 health
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Productive Life Cycle
Social Institution
Family - PreSchool - School - College - Job - Retirement
Function
Learning: Accumulating Human Capital - Earning - Spending
Age Line
0
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4
6
18
23
65
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Accumulating Human Capital
Inflow
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Stock
Outflow
50
Accumulating Human Capital
Inflow +
Net Inflow
Stock
Outflow
-
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Accumulating Human Capital
Learning +
-
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Investment
Human
Capital
Depreciation
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Allocation of Your Time
Build Capital
by Learning
Human Capital
Use Capital
for Earning
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24 hours
Time Endowment
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0 hours
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24 hours
Leisure
(learning)
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Allocation of Your Time
Build Capital
by Learning
Human Capital
Use Capital
for Earning
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Earnings
$480
Opportunities for trading leisure
for earnings (income) at a rate,
$20 per hour, determined by your
stock of human capital
$0
0 hours
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24 hours
Leisure
(learning)
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Salaries by Education Level, CA
Full Time* Workers
Education
No HS Dipl.
HS Dipl.
Bachelor’s
Master’s
Doctorate
Professional
Salary
$26,115
$27,326
$44,426
$52,787
$59,348
$77,877
Wage
$13.06
$13.69
$26.39
$26.97
$29.67
$38.94
*Full Time: >35 hrs/wk, >48 wks/yr.; Source: LA Times, 1-10-93
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Earnings
$480
college grad
$240
dropout
$0
0 hours
24 hours
Leisure
(learning)
Economists Assume You Can
make Comparisons

For example: you can compare a high level
of your income and a low level of your
leisure with a low level of your income and
a high level of your leisure
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Earnings
$480
low value
high
Iso-Preference Curves:
You value all points on
a curve equally
high value
$0
0 hours
24 hours
Leisure
(learning)
Earnings low value
$480
$180
for 9 hrs
of work
high
Optimum
high value
$0
0 hours
15 hours
of leisure
24 hours
Leisure
(learning)
Earnings low value
$480
high
slope of the iso-preference
curve through the 24 hour
endowment is the lowest
wage at which you are
willing to work
$0
0 hours
24 hours
Leisure
(learning)
Earnings low value
$480
high
slope of the iso-preference
curve through the 24 hour
endowment is the lowest
wage at which you are
willing to work
$96
$0
0 hours
24 hours
dropout is unwilling to work for $4/hr
Leisure
(learning)
Participation in the Labor Force:
Willing to look for work

If your market wage exceeds your
reservation wage
 college
grad, @$20/hr, participates
 the junior high dropout, @ $4/hr, does not
We assumed the college grad and the
dropout both have the same values for
income and leisure
 Only their learning histories differ

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Earnings low value
$480
high
slope of the iso-preference
curve through the 24 hour
endowment is the lowest
wage at which you are
willing to work
$96
$0
0 hours
24 hours
dropout is unwilling to work for $4/hr
Leisure
(learning)
Productive Life Cycle
Social Institution
Family - PreSchool - School - College - Job - Retirement
Function
Learning: Accumulating Human Capital - Earning - Spending
Age Line
0
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6
18
23
65
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Summary
Your economic status affects your probable
behavior: work or crime
 Earning power affects your probable
behavior
 When you are a young teen you need a
parent or role model to motivate you to stay
in school and keep learning

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The End
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2003
Number of Responses Versus Score for Homicide
100
90
90
80
Number
70
60
50
40
30
20
15
10
1
3
0
1
0
0
0
0
1
2
1
2
3
4
5
6
7
8
0
9
10
Score
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Class Survey 2003
Scoring Ten Behaviors
 113 Responses
 No two are the same
 Two most similar responses
 Two most different responses

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Similar Scorings
Homicide
Poisoning
Rape
Arson
Sell Heroin
Auto Theft
Embezzle
Prostitute
Possess Pot
Sniff Glue
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10
10
7
7
4
4
5
3
0
10
10
10
8
5
7
4
2
1
0
73
Different Scorings
Homicide
Poisoning
Rape
Arson
Sell Heroin
Auto Theft
Embezzle
Prostitute
Possess Pot
Sniff Glue
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10
10
10
8
9
7
7
5
8
1
5
2
4
3
6
7
8
9
10
74
2003
Number of Responses Versus Score for Homicide
100
90
90
80
Number
70
60
50
40
30
20
15
10
1
3
0
1
0
0
0
0
1
2
1
2
3
4
5
6
7
8
0
9
10
Score
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Dispersion Versus Median Score, 2003
2.5
Dispersion
2
1.5
1
0.5
0
0
2
4
6
8
10
12
Median Score
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Mean Rating
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SERIOUSNESS SURVEY
RATE THE SERIOUSNESS OF EACH OF THE FOLLOWING
BEHAVIORS ON A SCALE FROM ZERO( LEAST SERIOUS)
TO TEN( MOST SERIOUS):
MEDIAN ‘03 ‘05
1. HOMICIDE
_10 10__
2. MASS POISONING ( e.g. TYLENOL)
_ 9 8__
3. FORCIBLE RAPE
_ 9 9__
4. ARSON: SET FIRE TO A GARAGE
_ 7 7__
5. SELLING HEROIN
_ 6 6__
6. AUTO THEFT
_ 5.5 6__
7. EMBEZZLEMENT OF $1,000
_ 4 4__
8. PROSTITUTE IN A HOUSE OF PROSTITUTION _ 3 3__
9. POSSESSION OF MARIJUANA
_ 2 2__
10. SNIFFING GLUE
_ 1 1__
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Misery Index, California 1952-2003
25.00
unemployment rate
inflation rate
misery index
20.00
Rate
15.00
10.00
5.00
0.00
1950
1960
1970
1980
1990
2000
2010
-5.00
year
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California Misery Index and Crime Index, 1952-2002
45.00
CA Misery Index
CA Crime Index Per 1000
40.00
35.00
Rate
30.00
25.00
20.00
15.00
10.00
5.00
0.00
1950
1960
1970
1980
1990
2000
2010
Year
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California: Crime Index Versus Misery Index .
40
1980
1992
35
1975
30
1970
Crime Index
25
1998
20
15
10
1952
5
0
0.00
5.00
10.00
Misery Index
15.00
20.00
25.00
How best to
Learn in a
Lecture class
That does not
Have a
Section?
We
Recommend
Going to class.
The questions
On the exams
Are from topics
Discussed in
Class.
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How much
math does 160
require?
1.Descriptive
Graphs
2. Analytical
Graphs (exams)
3. Notation e.g
OF=f(CR,SE,SV
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Frequency
Homicide, W 06, 61 Respondents
60
50
40
30
20
10
0
53
0
0
0
0
1
1
2
3
4
5
0
0
0
6
7
8
7
9
10
Seriousness
Mode = 10, largest number of responses
Median = 10, score of 31st person
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Homicide, W 05, 98 Respondents
74
Frequency
80
60
40
16
20
1
2
0
1
0
0
1
3
1
2
3
4
5
6
7
8
0
9
10
Seriousness
Mode = 10, largest number of responses
Median = 10, score of 49th person
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Number of Responses Versus Score for Homicide 2004
73
80
70
60
Responses
50
40
30
14
20
1
10
1
3
0
0
1
2
3
4
5
6
7
8
9
10
Score
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Rape, W 05, 98 Respondents
Frequency
50
39
40
27
30
19
20
10
0
0
1
0
1
1
2
3
4
5
4
7
0
6
7
8
9
10
Seriousness
Mode = 9
Median = 9
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Possession of Marijuana, W 06, 61
Respondents
Frequency
40
33
30
20
9
10
6
2
5
2
2
1
0
1
6
7
8
9
10
0
1
2
3
4
5
Seriousness
Mode = 1
Median = 1
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Number of Responses Vs. Possession of Pot Score ‘02
35
31
30
27
Frequency
25
23
20
15
10
10
7
5
4
4
5
2
0
0
1
2
3
4
Score
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6
7
8
0
0
9
10
88
Disagreement Versus Seriousness, 02
Dispersion (Standard Deviation)
3
2.5
Sniff Glue
Prostitute
Selling Heroin
Possess Pot
2
Embezzle
Arson
1.5
Mass Poisoning
Auto Theft
Rape
1
Homicide
Homicide
2004
0.5
0
0
2
4
6
8
10
12
Score
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Embezzlement
Standard Deviation or Dispersion
John Tukey: Box Plot for Pot ‘09
Smallest = 0
Q1 = 1
Median = 1
Q3 = 3
Largest = 8
IQR =
2
Outliers: 8, 8,
8, 7,
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