Crime rates that have gone up hand-in-hand with prison populations, coupled with criminals who seem impervious to law enforcement, have led many people to ask a simple if disturbing questions: Is there any effective way to fight crime? It is increasingly clear that the two central tools of traditional law enforcement- police to apprehend the criminals and prisons to punish them- may be every bit as effective as their proponents claim in discouraging criminal activity. Economists study crime and punishment in two aspects: how a criminal might be expected to look at the anticipated costs and returns of criminal activity; and how government consider the benefits and costs of an additional person to the prison, as well as the benefits and costs of an additional officer to the police force. Two areas on which economists have focused their study of crime and punishment are: (1) the impact of increasing the probability that criminals will be detected and apprehended; and (2) the role of punishment. One important study found out that the benefits and costs of punishment are marginal. The strongest deterrent of police and the effect of imprisonment are strongest on more violent crimes. Two lessons that emerge from these studies: (1) politicians are likely to continue pouring more money into law enforcement, and (2) those resources are going to have a growing impact in reducing crime.
Even the analysis of crime and punishment involves the consideration of marginal benefit and marginal cost of committing a crime, and enforcing a deterrent to crime. It’s almost always that every crime involve economic considerations, and from two point of views. From the crime offender’s point of view, he tries to maximize the benefits he will get considering the costs he will incur, which includes the punishment he gets depending on the probability of getting caught. From the government’s point of view, it tries to minimize the harm a crime can give to any group or individual considering the revenue it can get from the punishment of captured offenders (i.e. fines) and the cost of system of enforcement. Of course, the offender has influence on how he weighs the benefits of the crime. The probability of getting caught is also under his control. The kind of punishment, as well as the system of enforcement being applied is up to the government. One insight from this analysis is that punishment should fit the crime; meaning, larger levels of enforcement and larger fines should impose larger marginal costs on the criminal, and this would lead to a reduced level of criminal activity. Another insight is that although both increasing the cost of crime for a criminal and increasing the level of enforcement are effective deterrents to crime, the latter is costly to the state, while the former imposes no cost at all.