LIT1: Cooter, R. & Ulen, T. (2016). Law & Economics (6th ed.).

Question 1

What does the Economic Theory of crime offer? (Cooter & Ullen)

Answer 1

The economic theory of crime offers:
- Reasons for the characteristics of a crime.
- Distinguishes criminal prosecutions from civil disputes.
- Offers a predictive model of criminal behavior.
- Proposes a clear goal for criminal law.

Question 2

What is Internalizing in Economics?

Answer 2

In simple terms, internalizing in economics refers to the process of incorporating the external costs or benefits of an economic activity into the decision-making process of the parties involved.

The goal is to ensure that the costs and benefits of the activity are reflected in the prices paid by the participants, rather than being imposed on third parties who are not part of the transaction. This can be achieved through various means, such as taxes, subsidies, regulations, or market-based mechanisms such as emissions trading.

Question 3

What is the effect of Tort Law on Criminal Law? Cooter & Ulen

Answer 3

Tort law (Civiel Recht) achieves efficient incentives by making injurers—and, in some cases, victims—
internalize the cost of accidents.

Most crimes are also torts, which means that most criminals are vulnerable to civil suits.

Question 4

Why CANT criminal law internalize costs? Cooter & Ulen

Answer 4

1. Perfect compensation may be impossible
2. The law may seek to protect the rights of potential victims rather than their interests
3. Punishment is often necessary for deterrence

Perfect compensation may be impossible

Compensation is perfect when potential victims are indifferent about accidents
in the sense that they would just as soon have the injury and the damages as
have no injury and no damages.
The concept of indifference is difficult to
apply to crimes like assault. Consequently, the relevant law cannot take as its
goal the perfect compensation of victims and the internalization of costs by
injurers.

Criminal punishment aims to deter intentional harms, not to compensate for
them. The state prohibits people from intentionally harming others and backs
this prohibition by punishment. Thus, criminal law is a necessary supplement to
tort law when perfect compensation is impossible.

**
The law may seek to protect the rights of potential victims rather than their
interests**
Protecting rights secures liberty and society is, in general, better off when goods
are acquired through voluntary exchange.

**
Punishment is often necessary for deterrence**
In order to deter criminals, the law must impose enough punishment so that the
expected net benefit of crime to the criminal is negative.

When deterrence is the goal, actors are not free to pay the price and do as they
please. Instead, punishments are calibrated to deter those actors who prefer to
do the act in spite of its price.

Question 5

What are the different approaching to the goals Internalization and Deterrence? Cooter & Ulen

Answer 5

The law should aim for deterrence when perfect compensation is impossible in
principle or in practice, when people want law to protect their rights instead of their
interests, or when enforcement errors systematically undermine liability.

Question 6

How does rational crime work according to Cooter & Ulen

Answer 6

Crimes can be ranked by seriousness and
punishment can be ranked by severity.

Punishment is probability, not certain. Therefore, a rational decision maker takes the probability of punishment into account when contemplating the decision to do a crime.

Efforts to detect, prosecute and convict criminals increase with crime seriousness.

More certain and severe punishments reduces the seriousness of crime.

Question 7

What is the cause effect of the Model of Rational Crime to Public Policy (Cooter & Ulen)

Answer 7

An increase in the marginal probability or seriousness of punishment causes
a decrease in the aggregate number of crimes.

Question 8

What is the First Law of Deterrence (Cooter & Ulen)

Answer 8

The proposition that an increase in expected punishment causes a decrease in
crimes is the “ First Law of Deterrence.”

Question 9

What is the central question in the Model of Rational Crime to Public Policy ( Cooter & Ulen)

Answer 9

“How much do
crime rates respond to increases in expected punishment?”

Thus, the
elasticity of the supply of
crime.

Question 10

What is the effect of (in)elastic supply of crime (Cooter & Ulen)

Answer 10

When the supply of crime is elastic, policymakers can reduce crime significantly by moderate increases in expected punishment.

When the supply of crime is inelastic, however, the variables encompassed by the economic model of rational crime are less important than other variables, such as employment rates, family configuration, drug addiction, quality of schooling, and so on.

Question 11

What are the variables to rational, amoral criminals? (Cooter & Ulen)

Answer 11

1. The
   probability of punishment
2. The
   severity of punishment
3. The
   opportunities to commit crimes

Question 12

What is Criminal Intent? (Cooter & Ulen)

Answer 12

Criminal intent, also known as mens rea, is a key concept in criminal law. It refers to the mental state or the conscious decision someone makes to deliberately engage in an unlawful or negligent act, or to harm someone else

Question 13

What is an added factor to Rational criminals? (Cooter & Ulen)

Answer 13

The commission of most crimes, however, requires
criminal intent. To commit
crimes, it is not enough for people to act as if they had criminal intent. They must
actually have it.
So, criminal law concerns reasons, not just behavior

Question 14

What is the Economic Model of Choice Cooter & Ulen

Answer 14

The economic model of choice describes the deliberation of rational criminals when their crimes are premeditated, and rational criminals can behave as if guided by the economic model when they commit spontaneous crimes.

If this assertion is true, empirical investigations should demonstrate that crime rates
respond in the predicted manner to punishments and payoffs.

Question 15

What is Saturday Night Fever (Cooter & Ulen)

Answer 15

Diminished Rationality

Young people often commit crimes when they temporarily lose control of their emotions
and act impulsively.
We call this behavior “
Saturday Night Fever.”

Question 16

What is the role of Diminished Rationallity to Criminality? (Cooter & Ulen)

Answer 16

Many crimes and torts occur under conditions of diminished rationality. For
example, many crimes result from
lapses, which are temporary aberrations in
behavior.

Question 16

What is Prudence and Imprudence? (Cooter and Ulen)

Answer 16

Prudence involves giving reasonable weight to future events, whereas imprudence
involves giving unreasonably little weight to future events.

Question 17

What is Occasinal Imprudence? Cooter & Ulen

Answer 17

Occasional imprudence is a kind of lapse in which
the actor temporarily
discounts the future consequences of his or her behavior at a much higher level
than ordinarily would be the case.

Question 18

What is the effect of imprudence on severity of sentencing (Cooter & Ulen)

Answer 18

Insofar as imprudent lapses cause crime, more severe punishment is not a very effective deterrent.

Severity is ineffective because the cause of crime is unreasonable discounting of
future punishment and increasing the punishment’s severity gets discounted too
much to have a large effect on behavior.

Alternatively,
increasing the certainty and immediacy of punishment may be more
effective for deterring crime.
Certainty of punishment is relatively important for impulsive youths, and severity is
relatively important for deliberative adults.

Question 19

What is the findings about Trade-offs between two future choices and a present and a future choice? Cooter & Ulen

Answer 19

Another finding is that
people are more consistent about their trade-offs between
two future choices than between a present and future choice.

• When people discount the future unreasonably, the immediate gain from doing something wrong attracts them more strongly than the threat of a future
  punishment.
• Increasing the severity of the future sanction has little effect on their behavior
  because the future has little effect on their behavior

Question 20

What is Unreasonable Discounting of the Future (Cooter & Ulen)

Answer 20

Unreasonable discounting of the future, whether probabilistic or systematic, is a form of diminished rationality that afflicts many people.

When rationality diminishes too far, a person becomes insane. An insane person is legally incapable of committing a crime and cannot be punished legally.

Question 21

What are the costs to society of Crime? (Ccooter & Ulen)

Answer 21

1. Social Harm
   The criminals gain something, and the victims suffer harm to their persons or
   property. The resulting social harm, according to the standard view among
   economists, equals the net loss in value.
   F.e. if a thief shatters a car window costing $100 and steals a radio worth $75,
   then the criminal gains $75 and the victim loses $175, for a net social loss of
   $100.
2. Preventitive Resources

The state and the potential victims of crime expend resources to protect against is.

** Criminal law should minimize the social cost of crime, which equals the sum of the harm it causes and the costs of preventing it.**

Question 22

What is the Optimal Amount of Crime Detterence and Efficient Punishment (Cooter & Ulen)

Answer 22

Socially optimal deterrence occurs at the point where the marginal social cost of reducing crime further equals the marginal social benefit.

As long as deterrence is costly, the optimal amount of crime is positive. Costly deterrence precludes a rational society from entirely eliminating crime. If deterrence costs rise, the optimal amount of crime rises.

If, however, the net harm from crime rises, the optimal amount of crime falls

Question 23

What is the relation of private investment to Private Deterrence and Public Detterence and its relation to redistributing crime (Cooter & Ulen)

Answer 23

Installing a new lock on your door has private value for the private investor if it prevents the burglary of their house.
** This effect is private deterrence, because it benefits the private investor in precaution.**

Installing the lock has public value for their neighbors if burglars tend to avoid
neighborhoods in which some houses have brand X double-bolt locks.
This effect is public deterrence because it benefits the public.

Installing the lock has little social value if it prevents the burglary of the private investor’s house by causing a burglar to rob the house next door.
This effect is
redistributing crime, this has no net social benefit.

So, private investment in preventing crime usually has all three effects:
1. Private deterrence
The state need not encourage private investments that contribute to private
deterrence.
2. Public deterrence
The state should encourage private investments that contribute to public
deterrence.
3. Redistribution
The state should not encourage private investment that only redistributes crime.

Question 24

What is the difference between Ex ante and Ex post observable pracautions? (Cooter & Ulen)

Answer 24

Whether the redistributive effect is small or large depends on the type of precaution:
1. Ex ante observable precautions can be observed before committing the crime, like lights on walkways and exterior alarms.

Ex ante observable precautions
tend to redistribute crime—the mugger
avoids lighted streets, and the burglar avoids houses with barred windows and
visible alarms.

2. Ex post observable precautions can only be observed after criminals have begun committing the crime, like locks on interior doors and interior alarms.

Ex post observable precautions
promote public deterrence by reducing the average profitability of crime.

Therefore, the state should encourage ex post observable precautions, and the state need not encourage ex ante observable precautions.