MarijuanaControlled Substances

1

Marijuana in the news

Dispensaries

back country plots

2

Policy IssuesEnforcement Costs

Helicopters

Ecological damage to public forest lands

Danger to hikers etc. from armed & ruthless growers

Enforcement benefits

3

Canadian Enforcement Costs

4

UK Harm Scale

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6

7

Maricopa Highway, State 33

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Pine Mountain Ridge Road

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10

Reyes Campground Looking North

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Questions About Crime What are the Social Policy Options Towards

Victimless Crimes?education problem prevention

health problem cure for addicts and abusers

fiscal problem control use through taxes

law enforcement problem focus on demand?

users

focus on supply?distributors

16

Market Analysis

Compare and contrastfree market

enforcement

fiscal policy excise tax as a control device

17

Market Analysis concepts

market supply marginal cost of production: the additional cost of

one more unit cost of production equals the sum of marginal costs revenue = price * quantity sold

market demand price some consumers are willing to pay expenditure = price * quantity bought consumer surplus: a measure of welfare for those

consumers willing to pay above the market price

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Market Analysis Concepts

supply and demand determines the market price

the marginal cost of production = the marginal value of consumers

the quantity demanded equals the quantity supplied

profit = revenue - cost of productionprofit, or producer’s surplus, is a welfare measure

total welfare benefit = consumer’s surplus + producer’s surplus

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Quantity Produced

Cost ofProduction

Marginal Costof Production

MarginalCost

Quantity

Market SupplyMarket Supply

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Market DemandMarket Demand

MarketPrice, PM

Quantity Demanded, QM

RevenueR = PM QM

Market Demand

ConsumerSurplus

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MarketPrice, PM

Quantity Demandedand Produced, QM

Demand

Supply

Cost ofProductionTrapezoid

Profit =Revenue -Cost

ConsumerSurplusTriangle

Market Supply and DemandMarket Supply and Demand

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Enforcement Policy: Search, Confiscate, ResaleEnforcement Policy: Search, Confiscate, Resale

a

PM

PM

2 a

2 PM

FreeMarketSupply

Search, Confiscate,Resale: Supply

Quantity Produced

Price,MarginalCost

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a

2 a

FreeMarketSupply

Search, Confiscate,Resale: Supply

Quantity Producedand Demanded, QS, C, R

Price,MarginalCost

Demand

FreeMarketPrice, PFM

Search,ConfiscateandResalePrice, PS, C, R

Enforcement Policy: Search, Confiscate, ResaleEnforcement Policy: Search, Confiscate, Resale

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Enforcement Policy: Search, Confiscate, BurnEnforcement Policy: Search, Confiscate, Burn

a

PM

PM

2 a

2 PM

FreeMarketSupply

Search, Confiscate,Resale: Supply

Quantity Produced

Price,MarginalCost

Search, Confiscate, Burn: Supply

QM

QM / 2

25

a

2 a

FreeMarketSupply

Search, Confiscate,Resale: Supply

Quantity Producedand Demanded, QS, C, B

Price,MarginalCost

Demand

FreeMarketPrice, PFM

Search,ConfiscateandBurnPrice, PS, C, B

Search, Confiscate, Burn :Supply

Enforcement Policy: Search, Confiscate, BurnEnforcement Policy: Search, Confiscate, Burn

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Fiscal Policy: 50% Excise Tax, Government Keeps the RevenueFiscal Policy: 50% Excise Tax, Government Keeps the Revenue

a

PM

PM

2 a

2 PM

FreeMarketSupply

50 % Excise TaxSupply

Quantity Produced

Price,MarginalCost

Tax/unit = 0.5 Price/unitRevenue - Tax = $20,0002 Plots*P - 2 Plots*T = $20,0002(P - T) = $20,0002(P - 0.5P) = $20,000P = $20,000

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Fiscal Policy: 50% Excise Tax, Government Keeps the RevenueFiscal Policy: 50% Excise Tax, Government Keeps the Revenue

a

PM

PM

2 a

2 PM

FreeMarketSupply

50 % Excise TaxSupply

Quantity Produced

Price,MarginalCost

Tax/unit = 0.5 Price/unitRevenue - Tax = $20,0002 Plots*P - 2 Plots*T = $20,0002(P - T) = $20,0002(P - 0.5P) = $20,000P = $20,000

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a

2 a

FreeMarketSupply

50 % Excise TaxSupply

Quantity Producedand Demanded, Q

Price,MarginalCost

Demand

FreeMarketPrice, PFM

Price, Pwith a 50%Excise Taxand BuyProgram

50 % Excise Tax and BuyProgramSupply

Fiscal Policy: 50% ExciseTax, Use Revenue to Buy MarijuanaFiscal Policy: 50% ExciseTax, Use Revenue to Buy Marijuana

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Fiscal Policyan excise tax is cheaper

than enforcement & more effective

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Questions About Crime What are the Social Policy Options Towards

Victimless Crimes?education problem prevention

health problem cure for addicts and abusers

fiscal problem control use through taxes

law enforcement problem focus on demand?

users

focus on supply?distributors

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Education Let an informed public make a choice

An individual would weigh the benefits against the costs

If the benefit/cost ratio exceeds one smoke drink

Could impose costs on others driving under the influence second hand smoke

Protection of Minors blandishments of advertising influence of peers

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Health

Treat substance abuseNeed to identify the abusers many citizens are not covered under health plans

Difficult to cure addicts

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Fiscal Policy

Use excise taxes, a tax per unit, to control demand

tax per pack of cigarettes

tax per bottle of gin

Policy moderates rather than eliminates uselacks the moral suasion of a law prohibiting use

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Law Enforcement Control demand?

hard to keep tabs on numerous users

loss of respect for the law people like to party

Control supply?at home search and destroy policies have a low success

rate

abroad interdiction of supply has low success rate we export our enforcement problem to:

producing countries, e.g. Bolivia, Peru, Colombia

Trans-shipment countries, e.g. Mexico35

What are the Tradeoffs Among Policy Options?

ReviewINTRODUCTION (facts or trends, graphics, themes)

Current policy issues. What did we discuss?

History of California Prisons. Have they always been overcrowded?

History of California Offense Rates. Have they always been high?

The Economic Approach to Crime Control (graphics)

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Outline for Today: 09/22/2011

Syllabus: course details

Syllabus: Assignments by Lecture Number

Current Criminal Justice Policy Issues

Trends in California imprisonment and crime levels

Questions about crime trends and imprisonment trends

The Economics of Crime Control

3838

39

.00

.01

.02

.03

.04

55 60 65 70 75 80 85 90 95 00 05 10

CAINDXPC

.000

.001

.002

.003

.004

.005

55 60 65 70 75 80 85 90 95 00 05 10

CAPRPC

California Index Offenses per Capita and California Prisoners per Capita, 1952-2010

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The Economics of Crime Control

Objective: minimize the sum of damages to victims and expenditures on the criminal justice system

Damages to victims = loss rate* offenses, or in symbols r*of

Expenditures on the criminal justice system, abbreviated CJS, for law enforcement, trials (district attorneys, public defenders, judges) and operating jails and prisons

The Graphics of Total Cost, TC

TC = r*OF + E

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$

E on CJS

Total Cost (E)

Minimum Cost

Optimal Expenditure

Economic Paradigm1. Choose objective

e. g. minimize sum ofdamages to victims plus expenditures, E, on CJS

2. Describe states of the world (options for choice)

Total cost curve (E)

3. Choose the best option

What Have We LearnedEven if crime is controllable, the optimal level of crime ( and damages to victims) is not zero

There comes a point where spending more on crime control, i.e. the CJS, costs more than is saved by reducing damages to victims, and this is where total costs start to rise above their minimum

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What If Crime, Or Some Types of Crime, are Not

Controllable

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The Graphics of Total Cost, TC

TC = r*OF + E

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$

E on CJS

r*OF(E)

45 degrees

Total Cost (E)

Minimum TotalCost is noExpenditure onCJS, E=0

0

optimum

The Graphics of Total Cost, TC

TC = r*OF + E

45

$

E on CJS

r*OF(E)

45 degrees

Total Cost (E)Minimum TotalCost is noExpenditure onCJS, E=0

0

optimum

What Did We Learn From Prohibition, 1919-1933?

The argument was: misuse or abuse of alcohol can have bad effects

Drunken husbands beat their wives

Drunken mothers mistreat their children

But the majority of people did not want to give up alcohol

Following the passage of the Volstead Act in 1919, we witnessed rum-runners, speakeasies, people making beer and bathtub gin

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ReviewTHE IMPACT OF CRIME ON SOCIETY

How much FBI Index Crime is There?

What are the Four Index Crimes Against Property?

What are the two main effects of crime on social welfare? (graphics)

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Outline and Issues 9/27/2011

Course logistics: gauchospace

Criminal Justice System (CJS) & economic paradigm: where do the values (prices) come from to evaluate the states (outcomes) of the CJS?

How much crime is there? How do we know?

Crime has two effects: Redistribution of welfare from the victim to the

perpetrator Opportunity cost or waste of resources for defense

How is Crime Measured

Victimization Surveys of Households U S Dept of Justice, Bureau of Justice Statistics,

Criminal Victimization

Citizen (Victim) Reports to Police U S Dept of Justice, FBI, Uniform Crime Reports

A Theme for this Course

Criminal Justice System is in crisis. Courts told former Governor Schwarzenegger to find

housing for prisoners or release them early City and County jails are overflowing and a revolving

door policy is in effect. Repeat offenders clog the system

Not enough judges and prosecutors

It Has Not Always Been This Way

The Criminal Justice System had been relatively stable in the decade after World War II

What happened? That is the story of this course.

We will review the history of criminal justice in the 60-plus years since WW II.

We will suggest policies that will help turn things around now. In brief, what is needed is triage, i.e. to use scarce resources that will improve public safety the most.

Questions about crimeQuestions about crime

Is crime a real problem or a media induced problem?

Is crime an economic problem?

Are we getting our money’s worth for the dollars we spend on police, jails, and prisons?

Taking CrimesTaking Crimes

Robbery

Burglary

Auto Theft

Larceny

Two Perspectives On Crime

No Problem

It’s Bad

Victim’s Income

Thief’sIncome

$6,000

$6,000

Income Distribution

$12,000Total or Social Income Line:Thief’s + Victim’s Income

$12,000

Income Redistribution$9,000

$3,000 $11,000

$1,000 socialcost of defense

$11,000

CrimeGeneration

Offense Rate,Damages toVictims

Fear

Media

Defense

Private Public Politicians

We over-react to crime and we do not triage

Questions about the Operation of CJS

If crime is going down, why are we devoting more resources to its control?

If drug offenders are mostly non-violent, why do we send them to state prison instead of rehabilitation?

Bad effects from taking crimes

Bad effects from taking crimes

Victim has less incentive to be productive

Victim has more incentive to spend time and money on defense

Analogous to war: guns vs. butter

What is society going to produce? defense against crime? or goods and services?

ReviewJOBS AND CRIME

Policy issue: Arizona gun laws

Question: What did we learn from the seriousness survey?

Question: What is the most important economic perspective about economic conditions and crime?

Long run: investment in human capital ( education & job experience)

Tradeoff between leisure & income (graphics) , i.e TIME IS MONEY

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Today 9/29/2011Policy Issue: Gun Laws (Arizona)

Seriousness ratings for ten behaviorsHow much would you pay to prevent your bike being stolen?

Experimental issue: Do economic conditions cause crime?

How to study for this course!

How to study for this course!

Lecture course: go to lecturesNo section and no TA

Look at outline slide at the beginning of each lecture with the major points and a summary slide at the end of each PowerPoint with the major points

Be familiar with the graphical analysis in the class notes & the PowerPoints

Look at last Winter’s (2011) midterm for clues

Read (listen, look, Google) the news and keep up with criminal justice system stories

The Economy and Crime

Is crime affected by the business cycle?

Do economic factors cause crime?

Outline Seriousness Survey

What can we learn from the survey?

Crime File Victims Jobs and Crime

Jobs and Crime Why do some people get involved with crime?

SERIOUSNESS SURVEY

RATE THE SERIOUSNESS OF EACH OF THE FOLLOWING BEHAVIORS ON A SCALE FROM ZERO( LEAST SERIOUS) TO TEN( MOST SERIOUS):

MEDIAN W11 F111. HOMICIDE _10 10__2. MASS POISONING ( e.g. TYLENOL)_ 9 9__ 3. FORCIBLE RAPE _ 9 _10_4. ARSON: SET FIRE TO A GARAGE _ 7 __75. SELLING HEROIN _ 7 _7_6. AUTO THEFT _ 6 _6_7. EMBEZZLEMENT OF $1,000 _ 5 __58. PROSTITUTE IN A HOUSE OF PROSTITUTION _ 4 __39. POSSESSION OF MARIJUANA _ 2 __110. SNIFFING GLUE _ 2 __1

Median seriousness Scores Fall 2011 and Winter 2011

7

1

Forcible rape

homicide

Poisoning

Arson, Selling heroin

Auto Theft

embezzlement

Prostitute

, Pot Possession, Sniff ing glue

y = 0.8367x + 1.1633

R2 = 0.9882

0

1

2

3

4

5

6

7

8

9

10

0 2 4 6 8 10 12

Fall 2011

Win

ter

2011

Consistency from year to year

Consistency from year to year

ConclusionsConsistency from year to year

Triage is possible: we can separate the more serious behaviors from the less serious behaviors

Distribution of Homicide Scores in F 2011

Histogram

0 0 0 0 0 0 0 2 03

43

0

10

20

30

40

50

0 1 2 3 4 5 6 7 8 9 10

Seriousness score

Fre

qu

en

cy

Three ? Views on Pot, Fall 2011

Score: 0-2, 35Score: 3-5, 11Score: 6&7, 224, a score of 1, would carry a majority vote, 32, a score of 2, would carry a 2/3 vote

Histogram

7

20

85

3 31 1 0 0 0

0

5

10

15

20

25

0 1 2 3 4 5 6 7 8 9 10

Seriousness Scores

Fre

qu

en

cy

The more serious the behavior, the less disagreement about

policy. Fall 2011

Mass Poisoning

Embezzlement

Arson

Auto Thef t

Prostitute

Pot Possession

Selling Heroin

Sniffi ng Glue

Forcible rape

Homicide

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2

0 2 4 6 8 10 12

Seriousness Score

Months Served in California Vs. Fall 2011 Seriousness

Possession Vehicle Theft

Arsont

Rape

Homicide

y = 9.445e0.1906x

R2 = 0.693

0

20

40

60

80

100

120

0 2 4 6 8 10 12

Seriousness Scores

Mo

nth

s S

erv

ed

Months Served in CA Prison Vs. F ’11 Seriousness Scores

Months Served in CA Prison Vs. F ’11 Seriousness Scores

Questions About Crime

Does the Business Cycle Affect Crime Rates?

Does an Individual’s Life Cycle Affect Crime Rates?

Why do some people live socially unproductive lives?

Two Points About Economic Conditions

and Crime Relationship of Crime to the Business Cycle

Short Run: Business Cycle Is Phil Cook wrong? California: the misery index and crime

misery index = unemployment rate + inflation rate

Relationship of Crime to the Life Cycle Long Run Investment in Education Role of the Family

24 hours0 hoursLeisure(learning)

Earnings

$480

$ 0

high

low value

slope of the iso-preference curve through the 24 hour endowment is the lowest wage at which you are willing to work

$96

dropout is unwilling to work for $4/hr

REVIEWDETERRENCE AND THE DEATH PENALTY

Policy issue: The Death of the Death Penalty Newsweek, CA

The Arguments: Pro Vs. Anti, NIJ video

Debate: Is the death penalty a deterrent?

Homicide and executions, CA compared to other statespp

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Outline 10/04/2011 The Death Penalty

Arguments Philosophical and moral (lexicographic ordering) Practical: Is it a deterrent?

Impact on the criminal justice system: Detention (prison building era) dominates

Operation of the Death Penalty

Homicide and Executions

Crime Generation

Crime Control

OffenseRate PerCapita

ExpectedCost ofPunishment

Schematic of the Criminal Justice System

Causes ?

(detention,deterrence)

Expenditures

Weak Link

Questions About CrimeDoes the Expected Severity of Punishment Deter Crime?

expected severity = probability of punishment * severity of punishment

e.g. in LA County: 0.005*death penalty

Why Do We Keep Building Prisons at Great Expense to Warehouse Convicts?

Doesn’t deterrence work?

Do we have to rely on detention?

Controversy About the Death Penalty

Death penalty is the most severe sentence. Does it deter crime?

Opponents of the death penalty say no.Their evidence? Critiques of studies that indicate the death penalty is a deterrent.

Why are so few murderers who receive the death sentence executed in California? Death sentence appeases the proponents. Few executions appeases the opponents.

Executions in the US 1930-2007

http://www.ojp.usdoj.gov/bjs

Peak to Peak: About 65 years

Bureau of Justice Statistics

Peak to Peak: 50 years

Policy Impact of Opponents to the Death

Penalty As an instrument for crime control, deterrence has been a casualty of the argument about the death penalty. The argument: if the death penalty does not

deter murderers, then deterrence must not work as a control.

As a consequence, society relies more and more on detention for crime control. Society builds more and more prisons.

U.S.

Questions About Statistical Studies of

Deterrence Do we know enough about the factors that cause

crime? Can we find variables that will control for variation

in crime generation?

We have better measures for the factors that control crime than for the factors that cause crime. Unknown variation in crime generation may mask

the effects of crime control.

Source: Report to the Nation on Crime and Justice

Expect

Get

REVIEWSTRATEGIES TO ESTIMATE DETERRENCE

What is the critique of econometric studies of deterrence?

What is the evidence for deterrence?

89

Schematic Model

Causes

Homicide

Controls:Imprisonment rateClearance ratio

Empirical Study of Certainty, Severity, & Causality

Empirical Study of Certainty, Severity, & Causality

-.8

-.4

.0

.4

.8

4

6

8

10

12

1970 1975 1980 1985 1990 1995 2000 2005

Residual Actual Fitted

Murder Rate Regressed on Clearance Ratio, Imprisonment Rate & Suicide Rate

Evidence Against the Death Penalty Being a

DeterrentContiguous States

Maine: no death penalty Vermont: death penalty New Hampshire: death penalty

Little Variation in the Homicide Rate Source: Study by Thorsten Sellin in Hugo Bedau,

The Death Penalty in America

Isaac Ehrlich Study of the Death Penalty:

1933-1969Homicide Rate Per Capita Control Variables

probability of arrest probability of conviction given charged Probability of execution given conviction

Causal Variables labor force participation rate unemployment rate percent population aged 14-24 years permanent income trend

911 call(characteristics of household Participants unknown)

Random Assignment

code blue code gold

patrol responds patrol responds

settles the household settles the household

verbally warn the husband take the husband to jail for the night

That’s all folks!