Transcript Criminal Law - David D. Friedman

Final Exam Time
Tuesday, May 20
19:45-22:00
Or so the web claims
Criminal Law
•The difference between criminal and civil
•Theory of optimal punishment
–How do we decide how many criminals to catch
–And what to do to them?
•Why benefits to criminals count
•Should the rich pay higher fines?
•The inefficiency of efficient punishment
–Why not replace all jail sentences
–With probabilistic execution?
–Same deterrence, no need for expensive prisons
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
What’s wrong with theft?
• Someone picks my pocket
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He is $100 better off
I am $100 worse off
We judge outcomes by summed benefits
So what’s the problem?
• Suppose picking pockets “earns” on net $10/hr, alternative work $5/hr
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People shift into the more attractive profession
Driving down its return
Until the marginal pickpocket gives up a $5/hr job to make $5.01 picking pockets
I still lose $100, but he makes about zero
• There will be inframarginal pickpockets
– Especially good at picking pockets or especially bad at doing anything else
– Who do somewhat better than that
• But there are also additional costs
– To protect myself keep most of my money in my shoe--and get a sore foot
– Or spend all my time watching out for pickpockets
• The argument generalizes
Rent Seeking
• Kruger’s example
– Exchange controls and exchange permits
– Competition to get valuable permits competes away their
value
• Homesteading example--already discussed
• Rent seeking and litigation
– A legal procedure, such as a tort suit, to transfer costs, sets
off rent seeking
– Justified only if there is some indirect benefit, such as …
– Deterrence.
– Hence “let the cost lie where it falls” makes sense in many
cases.
Efficient and inefficient offenses
• Terminology
– Murder is a crime, burglary is a crime
– A particular murder or burglary is an offense
• Most offenses benefit the 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 offenses are inefficient, should be deterred
But …
• Consider
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The speeder with his wife giving birth in the back seat
The lost hunter breaking into an empty cabin
These are efficient offenses: Benefit>damage done
We want a legal system that permits these, but deters offenses
that are inefficient
• In considering how to do it, I will assume
– The only purpose of punishment is to deter
• One could make the analysis more complicated
• By allowing for incapacitation--being in prison or dead limits your
ability to commit more crimes
• And rehabilitation, if you think punishment can be used to change
people in ways that make them less likely to commit future crimes
– But not today
– And I will also assume rationality, as usual
Optimal Punishment
• How do we deter all and only inefficient offenses?
• Special case efficient offenses?
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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 offense is efficient?
Speeding to get to a very important meeting
• Criminal punishment as a Pigouvian tax
– We punish with some probability p of having to pay a fine F
– Set pF = damage done
• This assumes risk neutral criminal for simplicity
• To generalize, set certainty equivalent equal to damage done
– Crime is then only committed if value to criminal>damage
Does that explain why we don’t deter all murders?
What I have left out
• I have left out 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
• Consider an offense that
– Costs the victim $1000
– Benefits the criminal by $900
– For a net loss of $100
• We can deter it by either by
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Having more police, making it more likely the criminal is caught
Or punishing it more severely, or both
But police and punishment are costly
If the extra cost is $200, deterring it makes us worse off!
• How do the costs depend on probability and punishment?
• And how do we include them in our calculation?
Taking account of costs
• We deter offenses by some probability p of punishment P
• The cost of p: Enforcement cost
• Cost of Police, courts, etc. Cost more to catch more offenders
• Also, we could convict more criminals if we lowered our standards of proof
• At the cost of convicting more people who are innocent
• The cost of P--punishment cost
– Cost to criminal of being punished--costs to criminals count too
– Plus the cost to us of punishing him
– For example:
• A Fine: we get what the criminal loses
– Net cost zero
– Not counting administrative costs of collecting the fine
• Imprisonment
– Criminal loses a year of freedom
– We must pay for a year of imprisonment
– Net cost > amount of punishment.
• Execution:
– Criminal loses a life, we don’t get one
– Net cost is one life, equal to the amount of punishment
From Production Function to Total Cost Curve
• 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 minimum cost of any level of deterrence
• We have just derived the total cost curve for deterrence from
the production function.
– p and P are the (costly) inputs, deterrence the output
– We are finding the least costly input bundle for each level of output
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 he commits only offenses worth more than that
– So the one that he would commit if punishment was a little less has
benefit=expected punishment
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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
“Efficient offense” has two senses
• By committing the offense, does the criminal make us,
on net, better or worse off?
– If benefit to the criminal<cost to the victim
– The offense is inefficient
• By deterring the offense, does the legal system make
us on net better or worse off?
– The criminal can simply choose not to commit the offense
– We can prevent the offense only with more enforcement,
which may be costly
– So it may be inefficient to deter an offense
– Even though it does net damage
– And efficient to deter an offense that does net good!
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
Why Benefits to Criminals Count
• In all our calculations, gains and losses to criminals
– Count just like gains and losses to other people
– Why not ignore them, since criminals are bad people?
• One reason is it leads to a circular argument
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Thieves are bad, so their gains don't count
So theft is inefficient
Which explains why thieves are bad
We are trying to figure out what the law should be, not start knowing the
answer from our moral beliefs
• Another is that we want to generate a theory
– Sufficiently general to answer questions we don't know the answer to
– And lots of what we want to know our moral intuition doesn't give us
• Finally, if we can derive results that fit our moral intuition
– Without first assuming anything more than a goal of efficiency
– That is surely interesting
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 rich 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 a crime is punished with 10 years in jail
– Careful research establishes that the criminals
– Are indifferent between that and 1/6 of an execution
– So we can get the same deterrence at lower cost
• Convict, roll a die, 1-5 turn him loose
• 6 hang him
– Clearly an improvement
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Criminals, ex ante, are no worse off
Same deterrence, so victims no worse off
And we no longer have to pay for prisons
I'll ignore incapacitation, which makes the argument more complicated
– To save even more
• Fire enough cops, raise standard of proof, to lower p by a factor of six
• And hang everyone we convict
• More generally, we should never use a punishment if
– There is some higher punishment with lower cost/deterrence
– Since applying the higher punishment with lower probability
– Costs less in enforcement and punishment costs
For example
• Squeeze out money, since fines are an efficient punishment
– You can lower probability of execution by
– Suitable payments
• Then labor if it produces net income
– 5 years or $50,000. You can stay in prison 5 years
– Or accept an offer from a private prison
– You work, they pay your fine in less than five years
• Or execute, with organs forfeiting for transplant
• Or, if none of these produces positive return
– Either use execution or, if we want smaller punishments
– Flogging and the like
• Why don't we do it this way? Should we?
Rent seeking
• The problem
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If we want law enforced, enforcers must gain
But a way in which I gain at your expense
Is an invitation to rent seeking
I get you convicted, not because you did something wrong
• But because I can profit by convicting you
• Which means both of us spend resources
• Me framing you, you defending yourself
• Examples
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Mencken story
Niven story
Punitive damages
Civil forfeiture
Why we don't eat each other
• Burying dead people instead of cooking them
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Is a waste of good protein
Which is scarce in lots of societies
Yet routine cannibalism is very rare, if it exists at all
See "The Man Eating Myth" for evidence against
Why?
• The more the gain to killing someone
– The greater the rent seeking costs
– "Watch out, there's someone behind you with a knife"
• Consider the application to organ transplants
– The obvious solution to the shortage is a free market
– But how do you make sure the organs were donated?