The Rational Criminal

Random crime is something that has been a revise for many studious circles, however remaining a constant mirage. Approached only with observation, clearly it is evident how some crime may appear to be random, without rational and cause. However, crime is not of this nature, it is something that is approached with planning and analysis. Criminals are often portrayed as people that are socially deviant, without rule, ethics, morals, and respect for societal laws. The criminal however is like every other rational person, making decisions on the same standings and reasons as other people in the community would and do. There are concrete examples that prove this assumption throughout our history, such as during the Los Angles Riots when truck driver Reginald Denny was stripped and beaten outside of his vehicle. According to many people who believe that crime is irrational would say that he was simply at the wrong place during one of the most violent portions of American history. This is holed with questions though, and there has to be more substance to it then this simple belief.

Economics has held a concern for this subject since its inception. It is one of the core categories which compose urban economics most importantly, as cities seem to be one of the most flagrant locations for crime. Studies have been done by multiple economists that would disprove the common theories that crime is irrational, most notably by economists Gordon Tullock and Richard B. McKenzie. The pair attempted to prove this “sick animal” theory, that criminals are inherently bred to cause disorder, was a fallacy. Everything that they gathered supported their claim, that the criminal community is aware of what they are doing and to some extent performs a set of analytical exercises in their head which accompany their crime. Criminals who committed burglaries are commented as saying that they “would have chosen another route, actually have thought about it. There is no money like what I was making however.”

The criminal does a cost/benefit analysis as every other person does when attempting to approach a situation that requires a choice between differing outcomes. Just as a normal retailer when ordering products for his business decides whether to buy a product based on possible profit and opportunity costs in relation to other products, a criminal decides whether to commit a crime pending on outcome payoff. There is always a set of alternatives available for a criminal on whether he should commit a crime or not. A criminal will only commit a crime if the benefits exceed the costs, as any other rational person would do when faced with a decision. If the cost (more often than not the risk of incarceration) exceeds the payoff (depending on the crime), then the criminal will certainly not perform the crime.

It is not right to think of crime as random, spatial distribution. If this was the case, there would be a uniform distribution of crime across the United States, or any other arbitrary country. There would be no dependency on environmental concerns, and clearly location places a vital role in how crime is placed.

Crime is one of the central theories that urban economics tends to resolve. This is because of the importance of location in regards to crime patterns. Crime is not random, and is based off a cost/benefit analysis which the criminal performs, only to be increased in urban locations where the amount of criminal opportunities is increased. Urban location offers wealthier businesses for the criminals to choose from, increasing the chances that a criminal will perform an arbitrary crime (assuming it is not a passion crime). The choice of whether the crime should be performed or not is completely based off an individual preference. Assume there are two criminals, one in a rural location (criminal A) and one in an urban location (criminal B). In the rural location, the criminal A wishes to steal a tractor worth $2,500. Criminal B is contemplating a jewelry store robbery, a crime that would be worth $300,000. Even though the crime for criminal A is not worth near as much as B, he will still perform the crime if his benefits exceed his costs, the same situation with B. It is a scenario based off personal decision.

Deterrence becomes an issue not of rehabilitation then, but rather an issue of prevention. Our current remedy is to approach crime after the crime has been committed by issuing punishment (rehabilitation). Irrational criminal theory believes that the person that commits the crime is sick, the same way a diseased person is ill. We treat ill people by quaranting and treating them in a hospital or other rehabilitation center, and this is the same way that we should treat our criminals. Our prisons have never been fuller though, and our justice system has never been mocked by other foreign countries in such magnitude.

If we embrace rational criminal theory, the issue is simply prevention. If we make the crime not worth it to the criminal so that his costs exceed his benefits, he will not perform the crime. John R. Lott Jr. (University of Adelaide – School of Economics) did a paper in relation to this subject. A modern theory assumes that if guns are reduced, meaning more personal guns are locked and not available for public use, that crime will in turn be reduced. The opposite has been proven though, after safe storage laws were implemented 300 more murders, 3,860 more rapes, 24,650 more robberies, and over 25,000 more aggravated assaults were bred after 5 years throughout urban areas. This alone proves that crime has to be stopped by influencing the rational criminal, not by consequence after the crime has been performed.


Preventing Crime With Rational Theory

Crime is generally interpreted as a negative aspect that society has bred from social deviation and inequality of income, among several other aspects. Crime can be prevented by numerous measures, however the common deterrence routine is not effective (for further examination, see “The Rational Criminal”). The common fallacy in crime reduction policies that are implemented is these procedures inherently assume that the criminal is an irrational person, making it so that the most logical conclusion to prevent crime is issuing consequences to offenders after the crime is committed. The effectiveness of these types of policy implementations are holed with illogical assumptions, false suppositions, and negative objective outcome. The criminal is a logical and sensible person when faced with choice, meaning there exists a cost/benefit analysis within the criminal in relation to the differing possible outcomes. As stated in “The Rational Criminal”, irrational criminal theory believes that the person that commits the crime is sick, the same way a diseased person is ill. We treat ill people by quaranting and treating them in a hospital or other rehabilitation center, and this is the identical technique that we should treat our criminals. Our prisons have never been fuller though, and our justice system has never been mocked by other foreign countries in such magnitude. If we embrace rational criminal theory, the issue is simply prevention.

Using Rational Criminal Theory, which is solidified in fact and concrete thought proven in multiple models, we can derive policies that would cause a shift in the amount of crime (assuming population is kept relatively constant). A criminal executes a cost/benefit analysis preemptive to committing a crime, judging whether the accumulated payoff exceeds the possible incarceration and/or the possible amount of remuneration gained from legal means.

Expected Value Function

EL = Ps * Po

Expected Risk Function

Pi = Pa * Pp

Policies would only need to reallocate so that our equation worked out so that the costs are prohibitive, then crime would then not be an attractive and lucrative option.

(EL = Ps * Po) < (Pi = Pa * Pp)

Our main concern by implementing this theory is to stop crime from the start, by instituting methods that embrace prevention, not punishment.

By establishing a policy formulated around prevention we can derive a real, actual strategy that will not only be concrete in theory, but will lead to genuine positive conclusions. The most obvious method would be education and integration of accepted societal behaviors while the mind is still impressionable. However, with the failing of such programs in the past such as D.A.R.E., unfortunately this method is not so consented to. Education can slant deviant behavior and help to influence legal behavior, however environmental factors are significantly considerable, almost negating the impact of the education.

Policy must target those who are currently deemed by society as social deviants, specifically the ones presently in some stage of the correctional system. Focusing our primary attention on the imprisoned populations allows us to implement prevention policies afterwards, preventing increasing prison populace. Alternatively, both types of policies could be sought, which would be the most efficient, however would require a significant amount of funding.

Firstly, the actual prison building concept, the idea of housing inmates of various criminal backgrounds in a singular area, needs to be revamped. Research has proven in the past that most prison inmates have some prior records, and congregating with other convicted felons once a release is issued is around 63% (Bureau of Justice Statistics, 1989). Rehabilitation needs to be implemented in secure, customary environmental situations. Removing the other atmospheric factors that would otherwise disturb the rehabilitation process, such as other inmates, loss of luxuries, and a complete shift in lifestyle, allows a development that would not be possible in a “normal” prison scenario. By using prisons, we are just making the prisoner feel objectified; they are no longer an individual, but rather a case or number. Personal surroundings and normal environments provide a setting that would procure the most rehabilitative growth for a “social deviant.”

Secondly, it possible a prisoner does not adept well to rehabilitation in a normal setting. This is not exceptional, some people have extremities that cause malicious behavior that requires institutionalization. In this case, a policy should be implemented so that when the prisoner is deemed fit to enter society again, there has to be accountability taken by the person who signs the release of the prisoner. Ultimately, they are the responsible party for the person. A person that signs a release should therefore be punished if another crime is performed by the person they release, a very minor consequence. Perhaps something like a loss in gross take home pay would be an effective deterrent that would make people choose logical decisions when deciding to sign on the release of someone that might be inapt to enter society.

Thirdly, make prisons their own productive entity that is responsible for itself. Instead of having tax revenue going to fund inmates who do very modest industrious activity, make the prison a virtual urban center. If the prison is subsidized by itself, there will be an incentive to work by inmates, conditions are funded the people that they affect, and there is a vast release of funding which can be put to more productive use. Basically, maintenance would be prison generated. This could ultimately lead to outside business options could be explored, making the prison system a profit generating business rather than a governmental liability.

Fourthly, the death penalty has been an issue of constant moral and ethical debate in modern criminal theory circles for years, however remaining a mirage. The principal contention against capital punishment deals with ethical issues, as well as human error (people executed, then later found to be innocent).

If a person is so endowed in a lifestyle pattered with aspects that could be interpreted as net burden to humanity, then execution seems the most favorable reasoning. Advocates against capital punishment point out cases where a person has been declared of a crime, but were later found innocent for an assortment of reasons. If I serve forty years in a penitentiary, I can’t ask the state for that forty years back. It is a problem within the justice system, these errors should not be used to advocate against capital punishment as a whole. If there are errors directly related to capital punishment, then there is a basis for an argument.

After some time, capital punishment will just become another method of prevention theory, causing that equation that decides a rational criminal’s decision to be substantially larger on the cost side. The famous quote is that “one thousand people should be set free rather than one innocent man dies.” This is clearly based off the archaic policies that focus on punishment. It would be more efficient in terms of future crime rates if a singular person died rather than releasing one thousand convicted felons.

We also need to apply direct methods (methods that directly influence some variable) to the rational decision equation.

(EL = Ps * Po) (Pi = Pa * Pp) so that we can trigger the equation

EL = Ps * Po < Pi = Pa * Pp, increasing the probability of prevention.

Approaching this equation, we can derive that we could either decrease the payoff, or increase the possibility of incarceration time and/or the possible amount of remuneration gained from legal means. Either way it increases the value of the function on the right, increasing the aggregate possibility of prevention.

By decreasing Po, we decrease expected benefit, ideally the criminal will take into consideration alternative legal activities.

You could make the crime a more difficult endeavor (increasing security or something of that nature), which would in turn cause an increase of probability of incarceration, Pp.

We could also make legal opportunities a more beneficial option for the criminal, there have been studies which have empirically concluded that there is an inverse relationship between employment and crime rates (Grogger, 1994). As many criminals tend to have little education, more lower skilled jobs should be created, increasing legal opportunity. Also, by formulating a more skilled work class that would generate higher incomes, the crime rate would in turn likely decrease by a substantial amount. Lastly, we could alternatively try to affect Pa and/or Pp. We would have to increase the arrest rate and/or the probability of being sentenced to prison in some significant amount. By doing this, expected payoff will drop, causing the criminal to seek alternative options.


Economic Policy Issues

The IMF released statistics some time ago that gave an estimate of the amount of money laundered along with the estimated value which this amount would tag. The scope of the amount laundered is roughly between 2 and 5 percent of the worlds gross domestic product, 600,000 million, or roughly the worth of the economy of Spain. Most of the money that is unaccounted for would normally go to governmental bodies in the form of tax or seizure, however there is a decrease in aggregate governmental revenue and therefore a smaller budget for the government to work with. This leads to a deficiency of governmental policy implementations due to lack of funding. The economic policies that a government sets forth have to be funded somehow, however when they have such a large decrease in revenue it becomes increasingly difficult. This in turn leads to a struggling economy.

An emerging economy is a great situation for a launderer, as with a large amount being invested banking regulations can become relaxed. An open door for foreign investment however places the country on a crutch, and whenever it is stripped of the crutch the economy will in turn fall.

In this sense, there is both a positive and negative effect for an economy. If there is constant positive investment in a country, there is of course a positive outcome. Banks will be able to make commercial business loans and investment in many industrial and businesses sectors will bloom, among other beneficial outcomes. If a significant laundering operation is set forward, there can be adequate funds to support a small to medium sized economy. This can cause the economic blooming in a country which is budding. Conversely, if the perpetual investment is ever pulled, it is clear that the economic and financial sectors would collapse, and there would be long-term economic consequences.

Interest rates can also be affected, as there is no concern on RIO (return on investment), so investment is more often than not put into the more discrete, short-term projects. The money is not circulated through the body that would need the funds the most in order to feed a growing economy, crafting a false sense of genuine investment.

There is also an evident situation with allocation. Clearly, it is possible for a party to purposefully alter prices in the asset and commodity market during laundering. This can lead to an allocation of resources that is not most efficient, causing there to be larger scale economic issues and monetary instability.

In short, money laundering and financial crime may result in inexplicable changes in money demand and increased volatility of international capital flows, interest, and exchange rates. The unpredictable nature of money laundering, coupled with the attendant loss of policy control, may make sound economic policy difficult to achieve.