TAILIEUCHUNG - Lecture Economics of social issues - Chapter 5: Economics of crime and its prevention: How much is too much?

Criminal activities are defined as activities that are illegal. They may or may not be immoral. They are usually classified as (1) crimes against persons, crimes against property, traffic in illegal goods and services, and other crimes. In this chapter provides knowledge of economics of crime and its prevention. | Chapter 5 Economics of Crime and Its Prevention: How Much Is Too Much? Copyright © 2010 by the McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 5- What Is Crime? Immorality? Illegality? 5- Classification of Criminal Acts Department of Justice classification scheme Violent crimes Crimes against property Traffic in illegal goods and services Other crimes Recent trends in crime 5- The Costs of Crime Opportunity Cost Principle Direct costs + Negative Externalities + Cost of Prevention, Apprehension and Correction Total Cost of Crime Transfers of Purchasing Power Criminal activities versus Crime Prevention Activities 5- Different Types of Goods and Services Characteristics of Goods and Services Exclusivity Rivalry Private Goods and Services Semi-private Goods and Services Externalities Government intervention in the case of externalities Public Goods and Services Free-rider problem Government production of public goods 5- The Optimal Level of Crime Prevention Cost-Benefit Analysis of Crime Prevention 1 2 3 4 5 6 Units of Crime Prevention per Year Total Benefit to Society Marginal Social Benefit Total Cost of Society Marginal Social Cost Net Benefit to Society 0 0 -- 0 -- 0 1 200 200 60 60 140 2 380 180 120 60 260 3 540 160 180 60 360 4 680 140 240 60 440 5 800 120 300 60 500 6 900 100 360 60 540 7 980 80 420 60 560 8 1040 60 480 60 560 9 1080 40 540 60 540 10 1110 20 600 60 500 5- Allocation of the Crime Prevention Budget Equimarginal Principle Pie charts represent the discussion in the text. The text sets up a justice system “relatively overloaded in the area of detection and apprehension.” This is the system on the left. Readers are then asked to consider shifting resources from Detect and Apprehend to Determine Guilt or Innocence or Rehabilitate and/or Punish.” The end result is on the right. 5- Changing the Legal Status of Goods and Services Marijuana (millions of ounces per year) Price per ounce D1 D1 S1 S1 P1 M1 D2 D2 S2 S2 M2 P2 Click 1: D2 Click 2: S2 Click 3: grid lines at new equilibrium 5- Causes of Criminal Activity Economic benefits of crime Psychic income Economic costs of crime Psychic costs

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