Transcript Criminal Law - David D. Friedman

Crime: Outline
Two ways of getting all and only efficient offenses
Expected punishment equals damage done
Special case efficient offenses
Pigouvian punishment allowing for the cost of imposing it
Enforcement cost
Punishment cost
How they effect the optimal p/P combination
What this leaves out:
Incapacitation,
Rehabilitation,
Marginal deterrence
Does deterrence work?
Should the rich pay higher fines?
Stigma as punishment
Why not hang them all: The advantages of inefficient
punishment
Criminal Law vs Civil Law
• All crimes are crimes against the state
– If someone mugs me, I’m just a witness
– The state of California is the victim, legally
speaking
– And the state decides whether to prosecute,
controls prosecution, settles, collects any fine
• Torts are offenses against the real victim
– Who decides whether to sue
– Prosecutes, settles if he wants
– And collects damages
• The discussion of why is another chapter
Efficient and inefficient crimes
• Most crimes benefit criminal less than they harm
the victim
– If your car was worth more to me than to you
– I wouldn’t have to steal it--I could buy it
• And the opportunity for me to steal from you
– Gives me an incentive to spend time and effort stealing
– You to spend time and effort defending
– All of which is a net loss
• So most crimes are inefficient, should be deterred
• But consider
– The speeder with his wife giving birth in the back seat
– The lost hunter breaking into an empty cabin
– These are efficient crimes: Benefit>damage done
Optimal Punishment
• How do we deter all and only inefficient crimes?
• Special case efficient crimes?
– Traffic cop looks in back seat, waves you ahead
– Hunter gets off under the doctrine of necessity
– But what if the court can’t tell if the crime is efficient?
• Pigou
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We punish with some probability p of having to pay a fine F
Set pF = damage done
Crime is then only committed if value to criminal>damage
Does that explain why we don’t deter all murders?
• We have ignored the cost of catching and punishing criminals
– Deterring an offense isn’t worth doing
– If it costs more than the net damage the offense does
• How do the costs depend on probability and punishment?
• And how do we include them in our calculation?
Taking account of costs
• To get probability p of imposing punishment P
– Enforcement cost--police, courts, etc.
– Punishment cost--cost to criminal minus gain to us
• About zero for a fine (not counting trial, administrative costs, …)
• Cost to criminal of being imprisoned plus cost to us of running the prison
• Cost of execution is one life. Criminal loses it, we don’t get it
• Step 1: Find the efficient punishment/probability combination.
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Out of all pairs p,P that are equivalent to the criminal
And so give the same level of deterrence
Find the one with the lowest enforcement+punishment cost
Think of that as the cost of imposing expected punishment <P>
<P>= pF for a risk neutral criminal paying a fine
More complicated in the general case
So we now know the cost of imposing any level of deterrence
In the least costly way.
• Step 2: Find the efficient level of expected punishment
Find the optimal expected punishment
• Buy the level of deterrence at which marginal cost of deterrence equals the
benefit of deterring the marginal offense.
– More than that would deter some crimes not worth the cost of deterring
– Less would fail to deter some crimes that are worth the cost of deterring
• Benefit of marginal offense to offender equals <P>
– Because offenses worth more than that he commits
– Those worth less he doesn’t
– So the one that he would commit if punishment was a little less has
benefit=expected punishment
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So benefit of deterring is (damage done) - (benefit to criminal) = D - <P>
Set that equal to marginal cost of deterrence: D-<P>=MC
So <P>=D-MC
Optimal <P> = damage done by one offense - cost of deterring one more
offense.
• Note that MC might be negative
– Raising <P> increases the cost per offense
– But reduces the number of offenses
– If he is deterred, you don’t have to catch him and punish him
Implication
• For crimes that are hard to deter
– Increasing expected punishment a lot
• Only decreases number of offenses a little
• Which increases the enforcement cost/offense
• So cost increases, so MC of deterrence >0
– So the expected punishment should be less than
damage done
• We let some inefficient crimes happen
• Because deterring them costs more than it is worth
• Murder, for instance
• For crimes that are easy to deter
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Increasing <P> a little decreases offenses a lot
So cost decreases, so MC of deterrence is negative
So <P> should be less than damage done
Deter all inefficient crimes and some mildly efficient ones
To save the cost of apprehending and punishing them
Omitted Complications
• Incapacitation
– One effect of punishment is to prevent future offenses
• By jailing the offender
• Or killing him
– One can count that as a negative punishment cost
• Rehabilitation?
– Another affect might be to change the criminal
– For better or for worse Or the reverse
• Marginal deterrence
– One crime may be a substitute for another, so …
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If you raise the punishment for mugging, that might
Increase the number of burglaries
Life for armed robbery and murder means …
“As well hang for a sheep as a lamb”
– You should take this into account in designing an optimal
system of punishments
Why Count Benefits to Criminals?
• We count cost of crime net of benefit to criminal
– To many people that seems odd, since
– The criminal isn’t entitled to the money
• But we include “what rights do people have”
– Inside our analysis of the legal system
– So “criminals aren’t entitled to steal”
– Is supposed to be a conclusion, not an assumption
• It seems natural to count the benefit to me of “driving
dangerously”
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Such as getting home sooner by driving faster
Or not having my brakes checked every year
Or not buying a new and safer car
In deciding how the law should treat auto accidents
• Why should crimes not be analyzed the same way?
• But …
Efficient murder
• Suppose we construct an example
where murder is efficient
– Wealthy sportsman, ten adventurers
– $100,000 to each for permission to
– Choose one at random and try to kill him
• Any reason this should be illegal?
Stigma as Punishment
• After conviction for embezzling, hard to get a job as a
corporate treasurer
– Suppose you apply, offer to take a cut in pay?
– The fact that you can’t make an offer that will be accepted
– Is evidence that your gain from the job is less than their loss
• Which means that the stigma helps them more than it
hurts you
• Which makes stigma the one punishment with negative
punishment cost
– If it consists of information that makes other people change
their decisions wrt you
– In ways that make them better off, you worse off
– Because otherwise you could pay them to change the decision
• Is that all stigma is?
Should the Rich Pay Higher Fines?
• A $100 speeding ticket is nothing to Bill Gates
– Intuition: scale it up to get deterrence
– Economics, first pass:
• If his gain from speeding is more than our loss
• Then it is efficient to let him speed
• And since he pays the damage, we have no net loss--not
an issue of transfers between rich and poor
• Economics, second pass
– This assumes the Pigouvian world of zero
enforcement cost, punishment=damage
– We have just seen that optimal punishment also
depends in part on how much it deters
– And Gates has a different supply curve for offenses
than I do
– So a different optimal level of punishment
Intuition vs Economics
• Two kinds of offenses
– Payoff in utility
• Time saved by speeding
• Satisfaction of slugging a guy you don’t like
– Payoff in money
• Supply curve for rich vs poor
– If the payoff is in money
• The same fine should deter rich and poor
• The dollars of payoff are worth less to the poor too
– If the payoff is in utility, it takes a higher fine to deter the richer
offender
• The intuition is half right
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Sometimes the optimal fine is higher for the rich
Because it takes a higher fine to deter
Sometimes it is lower, because
Deterring the rich criminal costs more than it is worth
Why not hang them all?
• Suppose that currently we catch half the offenders, jail
them for five years
– The offender is indifferent between five years in jail and 1/6
chance of death
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Convict him, roll a die, 1-5 turn him free, 6 hang him
On average, the cost to the offender is the same as before
So the deterrence is the same as before, so no more offenses
And we don’t have to pay for any prisons
– Improved version: Only catch one in 12, hang him
• We don’t have to spend as much on police to catch one in twelve
• And we can raise our standard of proof, only convict when very sure
• We are substituting a more efficient for a less efficient
punishment
– On average, everything else stays the same
– So what’s wrong with it? Anything?
Improved Version
• There are more efficient punishments than hanging
– Use the threat of hanging to collect fines
• Can’t pay the whole $100,000 fine?
• Every $10,000 reduces the chance of hanging by .1
– Set a fine, make the prisoner work it off
– Execute the prisoner--and use his organs for transplants
• If for some reason we don’t want to execute
– Corporal punishment is more efficient than imprisonment
– And imprisonment is more efficient the more unpleasant it is
– Since that makes each year provide more deterrence
• Is there anything wrong with this story?
Everyone’s Incentives Matter
• If punishing people is actually profitable
– That is a reason to punish them
– Whether or not they are guilty
– Think of it as rent seeking via control of the legal process
• Examples
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Mencken story
Niven story
Punitive damages
Civil forfeiture
• If not profitable but cheap, still reason to worry
– A cheap punishment can become a profitable one via a
market transaction
– And if it is cheap, no need to be careful
– “How do we know which ones are heretics?”
–“Kill them all. God will know his own.”
The Market for Organs
• Argument for
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Shortage of organs
Selling when you die benefits your heirs
Selling in advance benefits you
Everyone has a spare kidney
•Argument against
–Rent seeking problem
–$50,000 on the hoof
•Cannibalism
–Why waste all that good meat? Yet all societies do
–Perhaps for the same reason.
–Solution—strong requirement of chain of title,
or …
•Can only sell a future claim to your organs.
Other paths
• Saga period Iceland
• Problems?
– Poor plaintiff?
– Judgement proof defendants
– Stability of the system
• Solutions
– Marketable tort claims
– Outlawry, credit, debt thralldom
– Njal saga story
• 18th century England
• puzzle: Why prosecute?
• Solutions:
– Deterrence as a private good—prosecution associations
– In order to be paid to drop the prosecution
• Puzzle: Why the bloody code?
• Shasta county
Is the common law efficient?
• General structure of property, contract, real property
bundling, I.P. etc. seem to fit, at least roughly.
• Some details fit
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Ultrahazardous activities
When easements enforceable against innocent purchaser
Negligence as a soln to double liability problem
Different standards of proof
• Some don’t
– Retreat from freedom of contract
• Penalty clause unenforceable
• No organ sales, no legal adoption market, …
• No waivers in product liability … but. Arbitration contracts.
– Treatment of value of life in common law
• Many we simply can’t tell:
– Coming to the nuisance twice
– Himalayan photographer vs eggshell skull
Summary
• Start with
– one behavioral assumption (rationality)
– One conjecture about the organizing principle: Efficiency
• End with
– A way of seeing all law as solutions to a common set of problems,
with a single objective, in different contexts.
– A way of applying the same set of ideas across legal topics:
• Risk allocation--contract, crime and tort.
• Ex Ante/Ex Post
– Tort and criminal law of highways
– Explaining why attempts are criminal
– Employment contracts.
• Externalities, incentives, double causation problem, transaction costs
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Pollution regulation
Defining property rights in land
Common law of nuisance
Tort law--auto accidents. Product liability.
Contract damage rules
• Way of making all law in all times and places into
one problem, with evidence useful across the
board
– Shasta County and inefficient punishment
– 18th century England and deterrence as a private good
– Iceland and transferrable torts.
• A way of figuring out what the law should be (if
you believe in efficiency)
• Perhaps a way of explaining the law as it is
– Now
– And across time and space