Comments on Economic Behavioral Theory

1. Comments on Economic Behavioral Theory Sally S. Simpson University of Maryland

2. Overview • Economic Theory in Context A. Neoclassical Theory B. Rational Choice Theory in Criminology (Cornish & Clarke, Paternoster, Nagin) • C. Lee-McCrary Behavioral Theory Model • Empirical Challenges to Behavioral Theory (L-M findings) • Theoretical Questions left to Answer

3. Neoclassical Theory • Core Assumptions • Behavior is rational (subject to constraints). • Actors hedonistic & self-interested, motivation to offend is universal and ubiquitous. • Individuals have identical preferences. • Crime is risky behavior and risk, therefore, affects behavior. • Core Propositions • Crime=determined by actual risks and benefits of behavior. • Crime can be discouraged by raising it’s “price.” • Cost is tied to punishment (certainty and/or severity)-- “mere deterrence.” Some attention to labor market losses. • Focus --Primarily on property crimes (fewer incorporate index offenses). --Differences in behavior due to differences in choice sets.

4. Weaknesses of Theory • Static, did not explicitly take into account the relationship between future expectations and current decisions. • Costs, theorized as formal punishment costs (justice system)—stigmatic, attachment, commitment costs ignored. • Assumed motivated offender. • No role for social norms—even though Bentham theorized differences in preferences as a consequence of education, family socialization, and other social forces. • Scope claims are limited

5. Criminology and rational choice theory. • Crime as constrained choice (knowledge/information, individual differences). • Different crimes, different opportunities, risks/benefits. Cannot assume models to be the same. • Situations/context (structural) affect assessments which vary by crime type (corporate crime versus burglary). • Norms affect preferences (morality/ethics). Do the right thing not out of self-interest (Etzioni) • Costs broadened beyond formal justice system (informal) and benefits beyond pecuniary gain (thrill/excitement). • Perceived versus objective costs.

6. Lee-McCray Model • Begin with standard economic model + stochastic life-cycle framework. Thus, dynamic behavioral model. • Actor chooses his/her pattern of participation to maximize expected utility from t forward under “exponential discounting.” Discounting varies: patient offender, impatient offender, myopic offender (recognition of I-differences). • Predict that juveniles will be deterred from offending after their 18th birthday because the cost of committing crime as an adult is substantially more severe and thus extracts a “higher price.”

7. Key assumption, all determinants of criminal behavior are evolving smoothly (i.e., only severity of sanctions adjusts at age 18 with greater sanction severity). • Models to test this behavioral response use longitudinal person-level arrest data. • Deterrence versus incapacitation effect. • Results show that there was no significant drop in offending at age 18 (no support for deterrence). • Rule out some potential confounds (subgroups and crime types), data flaws (not all of them—they are, after all, official arrest/incarceration data). • Support incapacitation.

8. Theoretical Implications of “no effect” findings. • Why “no effects?” Authors give three ideas. 1. Actors lack knowledge about punishments oroffenders behave irrationally. a. Lack of knowledge is consistent with extant theory through the constrained choice assumption. b. But if offenders behave irrationally, this challenges one of the main arguments of the theory and makes other theories of criminal behavior more attractive.

9. Theoretical Implications cont. 2. Offenders are behaving rationally but they have extremely low discount factors (i.e., do not distinguish 2 years of prison from 20) and thus do not see the 18th birthday as a salient transition. a. This explanation is more consistent with low self-control theory—and thus poses a challenge to the traditional behaviorist theory . Theoretical integration of lsc+rc has been proposed (e.g., Piquero and associates). b. The explanation is consistent with economic/biological theory of Wilson and Herrnstein who argue even with those who have low self control and a taste for immediate gratification can be deterred when punishment severity is somehow made salient to the actor. Yet, L & M are not optimistic this can be done.

10. Theoretical Implications, continued. 3. Offenders have hyperbolic preferences (low short-run discount factors but more reasonable long-run discount factors)—hence actors are myopic. Sentence differences are so small, offenders tend to see few differences between t and t+1 punishments. a. Completely consistent with behavioral theory. This explanation is preferred by Lee and McCrary. b. One wonders, however, what other factors might be at work in this sample of youthful offenders that have not been incorporated into the behavioral model?

11. Moving criminological theory forward: More questions • Although Lee and McCrary theorize how an actor’s current experience/knowledge of sanctions should be affected as a consequence of a “justice system” transition, is it fully a dynamic theory in the sense that it takes into account “how criminal and legitimate opportunities expected to prevail in the future affect current decisions about criminal activity” (Flinn, 1986). • How does the relationship between criminal and legitimate opportunities change over time as criminal and/or social capital increase/decrease and why? For instance, Uggan notes that job opportunities become salient for high rate offenders when they reach their mid to late 20s, but not before. It doesn’t seem reasonable that the monetarized return from legitimate work has increased to such a point--for these usually unemployed high frequency offenders--that it now exceeds the monetarized return from criminal activity (thus making crime less attractive).

12. Moving theory forward…. • The theory seems able to incorporate Individual differences such as knowledge, experience, IQ, and so forth but these components are not generally captured in the simplistic expected-utility-maximization principle versions of the theory. • Where are the social norms and values and what role should they (or could they) plan in the behaviorist model? • Socialization influences (peers, gangs, violent people and places) and psychic thrills (positive and negative)? • Why don’t situational contingencies play a larger role (motivations)? • Social/criminal capital as it affects preferences? ---I see the economics in rational choice theory, but where is the criminology in these behavioral theories?