Our Cost/Benefit Relationship With The Law

It is very compelling to me how much economics in a "cost/benefit" framework applies to the law and how we react to it. In a blog I recently read posted by Greg Goelzhauser, I couldn't help but think of the many risks we take in doing something illegal, or at least how many times we analyze the costs and benefits of doing such a thing.

The example that Goelzhauser gave, illustrated a man that was going to be late for an appointment at Columbia University because of the parking conditions. Although the man was a faculty member at the University, no one had been assigned a parking space. Given his options, he could park illegally which would put him very close to the campus, or for a certain price he could go to a parking lot a little further away.

I thought it was interesting how this professor analyzed whether the benefit of parking illegally, outweighed the cost the he might get a ticket. After conducting some research, he found that the more serious the crime, the greater chance one has of being convicted. Most of us don't think twice about jay-walking because we know that the likelihood of being ticketed is very slim and the benefit outweighs the risk that we might get caught. He also concluded that the criminals convicted of greater crimes would face a greater punishment.

Although this may seem like an obvious conclusion, I think there is some detail there that we don't consider. Why do we look for ways of getting around the law? Is it because the law doesn't always seem significant enough to abide by and we know that we can get away with some of the petty things? I'm not saying that I haven't tried to "get away" with some things that I thought were not important, but, I think it is a dangerous cycle we are entering as a society.

Our laws have become more and more complex because of people seem to be more concerned with individual justice, rather than In more serious cases that involve crimes such as burglary, theft, rape, or murder, the trend is that society is more concerned with "individual justice" rather than justice for our society as a whole. Because we are so terrified of convicting someone that is innocent, the burden of proof is set so high that we let to many murderers and rapists get away. Would it be better to wrongly convict a few more innocent people each year to be able to convict a lot more of the ones who are guilty? Is it more unjust that we convict an innocent person, or that we let lot's of the guilty ones go free while trying to discern, not forgetting that the ones that are guilty with continue to commit these horrid crimes?


Dr. Tufte said...

Oooh. I've got tons to add to this.

First, the fun part: I actually got caught making a bad decision similar to the Columbia professor. Two days before I moved here I ran over to the office of a colleague at Tulane University and parked in the ramp at neighboring Loyola University. But they had changed their rules - no more metered parking. I parked anyway, since parking in that part of New Orleans is very dicey. I came back within the hour to find a boot on my car ... on a Friday evening in December ... after final exams were over ... with packing to do at home. Dumb! This is what I mean when I say in class that everything you do is optimal at the time you do it, but that you may regret it later on.

Now for the informative part.

Different localities do prosecute minor crimes more aggressively. Jaywalking in particular, and getting caught by the red light when trying to make a left as well. Portland and Minneapolis are both known for this.

New York City even attributed much of its decline in crime during the 90's to the prosecution of minor crimes. The claim was that more serious criminals were being caught jumping subway turnstiles and the like. I have heard, but cannot document, that this argument is not supported by data.

One set of results that does hold water is provided by the premier economic researcher on crime patterns (the University of Chicago's Steven Leavitt). He recently published an article that documented the 4 reasons for the crime drop that are supported by the data (increased police, increased people in jail, less crack, and legalized abortion), and the 6 that are not supported by the data (the economy, demographics, better policing, gun control, permitting more concealed weapons, and the death penalty). See "Where Did All the Crime Go? at voluntaryXchange.

(Please steel yourself before checking out this site. There is a disturbing picture from today's Iraq news posted here.) The Calico Cat has recently talked about the problem of minor abuses of the law in a post entitled "Everyone Who Drives Is a Criminal" (no direct link, scroll to June 13).

Lastly, the issue of setting the guilty free occassionally to protect the innocent is the same one that you make in the first semester of statistics when you learn about Type I and Type II errors.

Lizzie said...

I used to work as a parking officer for a certain university that will remain unnamed, and when I would write parking tickets...(or even boot cars...) I heard some pretty interesting attempts at justifying people's wrong-doings. Truthfully, I didn't really care, I was there to enforce the rules and every driver on campus knew the rules and was therefore held accountable for them. We all do it, we all weigh our options (cost/benefit analysis) and then make a choice...the analysis is the easy part...it is facing the consequences of our wrongs that seems to be the difficult part. Selfish motives are never good for the whole. My point is, after you do your analysis and make your choice, take the consequences that come along with making either the right or wrong decision. You did the analysis now accept the penalty. Great article Kamm!!

Dr. Tufte said...

I was working too hard to think clearly on Friday. I forgot to include the (economic) point about my illegal parking at Loyola. This was that, ordinarily, I would never have done this, but I parked illegally in this case because it seemed like there was no way I'd ever end up paying (coming from one school, to visit someone at a second, while parking at a third, and moving out of town in 2 days). That reasoning made me think that the opportunity cost of illegal parking was much lower than it was usually.

Dr. Tufte said...

Lizzie's comment really gets to the heart of the distinction I've made in class between making optimal choices, and regret. Regret typically only arises after you've made an optimal choice, but have found out that there were costs that you didn't know about.

P.S. In the southeast, illegal parking goes up drastically during stormy weather. I think this is because the severity of storms is so high and variable that it tips people's cost benefit analysis severely.

pretzel said...

Parking Illegally. I think everyone can relate to this scenario. Well, at least I can. I still, to this day, have not driven my car to school because I don't want to buy a parking pass. I ride my bike most of the time, and the few times that I do take my car to school, I'd like to think, would not increase my chances of getting caught. But, because I know that the penalties are not too severe, I am willing to take that chance.

I'll eventually get a parking pass, but right now, the costs do not outweigh the benefits of riding my bike most of the time and taking my car occasionally. Come winter time, things may be a bit different. I may prefer the shelter of my car to full exposure to the elements (riding my bike). This, in turn, will increase my chances of getting caught since I will be parking my car here a lot more regularly. I'll probably opt for the parking pass then.

I know that illegal parking is not the theme of your blog. I just could relate to that particular example. I think there are many instance in our lifes where we weigh the benefits of taking chances over the costs of getting caught. When the penalties are lower and less likely to take place, then I think society, as a whole, is more willing to take its chances. This does encourage more breaking of the law due to less respect for the law. Not a good thing.

Jordan said...

Dr. Tufte said:

"In the southeast, illegal parking goes up drastically during stormy weather. I think this is because the severity of storms is so high and variable that it tips people's cost benefit analysis severely."

Our perception of benefits tends to be very situational. That's why I understand when someone does something in one situation that they wouldn't do in another (like parking illegally in a storm). But it doesn't seem like our perception of the costs should change from situation to situation. Rather, we should change our assessment of the probability of having to pay those costs.

Dr. Tufte said...

I'm not really sure what you're driving at here.