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Economic Theory of Criminal Behavior

Overview

The economics of crime started with the seminal article by Nobel Laureate Gary Becker in 1968. He suggested the well-known high-fine-low-probability result, in a framework where rational criminals compare the benefit of violating the law with the possible cost (in terms of probability and severity of punishment). Legal economists have developed a theory of deterrence in the last 40 years to explain optimal punishment in multiple contexts. The main results as well as new insights provided by behavioral law and economics are reviewed.

Basic Model

The economic theory of criminal behavior is an application of the neoclassical theory of demand. Formalized by Nobel Laureate Gary Becker in 1968, it states that potential criminals are economically rational and respond significantly to the deterring incentives by the criminal justice system. They compare the gain from committing a crime with the expected cost, including the risk of punishment, the possibility of social stigma, and...

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  • DOI: 10.1007/978-1-4614-5690-2_409
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Correspondence to Nuno Garoupa .

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Garoupa, N. (2014). Economic Theory of Criminal Behavior. In: Bruinsma, G., Weisburd, D. (eds) Encyclopedia of Criminology and Criminal Justice. Springer, New York, NY. https://doi.org/10.1007/978-1-4614-5690-2_409

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