Economics of criminology

The relevance of economic theories in criminology and the efficient reduction of crime

Scientific Essay, 2007

15 Pages, Grade: A



1. Introductory remarks

2. The economic and social costs of crime

3. Crime theories

4. Economic theories of crime

5. Critical view on theories of crime

6. The application and benefit of economic theories of crime

7. Conclusion


1. Introductory remarks

Criminality is and has always been an urgent issue for the society. Its magnitude has been rising dramatically in many western countries. Since 1946, crime rates in Britain have increased by the factor 10 and nowadays about 25% to 30% of the OECD-citizens are victimised each year.[1]

Together with criminality, public expenditure for the Criminal Justice System (CJS) has been rising sharply.[2] In order to achieve one of the declared main purposes of the CJS, “to reduce crime and the fear of crime and their social and economic costs”, theories of crime are an important contribution of the sciences. Accordingly, they are an important subject in many scientific fields: Psychology, Sociology and the Economic Sciences offer a large variety of different theories to explain the diverse aspects of criminality.[3]

The following text will discuss how and to what extend theories of crime and in particular economic theories of crime can help to reduce crime and the fear of crime.

In the process, first the economic and social cost- dimensions of crime will be elucidated. Then, crime theories and in particular Becker’s theory as the pioneering work of economic criminology will be introduced. Eventually, a critical view on theories of crime and the economic approach as well as an analysis of its distinctive advantages will be elaborated.

2. The economic and social costs of crime

The economic and social costs of crime are essential to understand the impact of crime on society. Unfortunately, the exact measurement of the costs (especially concerning the fear of crime) is difficult, if not impossible. It is nevertheless apparent, that they, regardless of their exact number, are severe.

Thereby, they can be roughly subdivided in 3 categories:

- Costs occurred in anticipation of crime These costs include among others: Security expenditure, precautionary behaviour, insurance resources and premiums, as well as fear of crime/ quality of life of potential victims
- Costs occurred as a consequence of crime which include e.g. property stolen and damaged, lost output or taxes, emotional and physical impact on quality of life and victim support services
- Costs occurred in response to crime, including e.g .police, prosecution, jury-, prison-, and probation- services, miscarriages of justice and legal aid defence costs.

The estimated total cost of crime to England and Wales between 1999 and 2000 amounts to at least £60 billion. As this figure does not include e.g. the costs of fear, it is most likely underestimated.[4][5]

As already mentioned, particularly the costs of fear and the impact on the quality of life are difficult to conceive. An example, which helps to understand the difficulties is the emotional affliction of a person who stays home at night, instead of going out in order to avoid potential victimisation. Apparently, this suffering poses a cost which varies individually and, in addition, can not be simply converted into monetary values. The same applies in considering the impact and costs of physical pain and suffering. However, it must not be neglected, that these factors impose a severe impact on the society and in particular on victimised citizens. Especially those who experienced a burglary, violent or sexual offence may suffer extremely from the emotional and psychological consequences which can often include a feeling of powerlessness, vulnerability, distrust or anxiety. Thus, their overall- mental health is affected adversely. This again results e.g. in lower effectiveness at work, social problems or lower personal benefit from leisure activities.[6][7]

According to Brand and Price, the emotional and physical impact of violent crime on victims “is possibly the most uncertain and important gap in our knowledge”.[8][9]

In summary, crime causes manifold costs which are in part difficult to conceive but nevertheless are enormous. Hence, it is of a large relevance and meaning for the national economy.

3. Crime theories

A crime theory designates at least one variable as the reason for the occurrence of criminal behaviour. Crime theories are not only supposed to explain criminal behaviour retrospectively but should be helpful to deliver an estimation of prospective criminal behaviour. Thereby, they can provide a foundation for a successful and rational counter policy.

By the help of theories, many aspects of crime can be explained. Still, it must be recognised that there is not any particular single theory which can explain criminality altogether and comprehensively. The issue is by far too complex and reasons, patterns and providing conditions vary for different kinds of crime.[10] Accordingly, before each application of a theory it must be carefully considered if it is appropriate (e.g. concerning the assumptions[11] on which it is based).

However, in order to reduce crime, it is crucial to understand the underlying causes and principles of the specific crimes. This concerns the offenders as well as the victims and the general framework. Theories are able to provide an explanation of these parameters and hence to identify possible starting points for counter- measures.[12]


[1] Cf. Bowmaker (2005), S. 104 - 107.

[2] Cf. Deadman and Pyle (2000), page 15.

[3] Cf. CJS (1999).

[4] Annotation: There are several factors which might have lead to an overestimation in calculating this figure. However, the neglecting of the costs of fear and the impact on the quality of life probably overcompensates their influence.

[5] Cf. Brand and Price (2000), page VII.

[6] Cf. Brand and Price (2000), page 24.

[7] Annotation: Despite the methodological problems, Miller, Cohen and Wiersema (1996) estimated the overall-costs, including “pain and suffering”, to victims of violent and property crimes in the USA. The result of their research totals around $450 billion per year.

[8] Quotation: Brand and Price (2000), page X.

[9] For a psychological approach to the issue of fear of crime (in particular from a conceptual and methodological perspective) see Gabriel and Greve (2003).

[10] Annotation: Obvious examples are the differences between a tax fraud or any white-collar crime and e.g. assaults or sexual offences.

[11] Annotation: In the case of economic theories this is e.g. that persons are rational utility maximisers. This will be elaborated further in the following paragraph.

[12] Annotation: Beneath the reduction of crime itself, the reduction of fear related to crime is a further purpose to be served. It is self-explaining, that both are linked to each other. Accordingly, reducing crime usually leads to a reduction in fear of crime as well. It must be considered, however, that fear concerning some crimes is not necessarily related to the actual risk of victimisation. This risk is in most cases (and in particular concerning murder) overestimated by far. Hereby, (regarding the costs of fear, see paragraph 2) theories respectively measures to reduce fear without directly influencing the risk of victimisation might be useful.

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Economics of criminology
The relevance of economic theories in criminology and the efficient reduction of crime
Loughborough University  (United Kingdom Loughborough University)
Economics of Criminology
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Economics, Criminology
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Val Kauth (Author), 2007, Economics of criminology , Munich, GRIN Verlag,


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