From a forensic economics perspective, optimizing the cost of crime deterrence aims to minimize the total cost to society. Criminal sanctions are a means of deterring crime by putting actors in fear of punishment, and should be designed to reduce social costs by taking into account the severity of the sanction and the probability of the sanction. This is more efficient than simply making the punishment heavier.
From the perspective of forensic economics, which looks at law as a methodology of economics, crime has several forms of costs. Crime has a negative impact on society by causing bodily injury or property damage to victims, and society has to incur various judicial and administrative costs to deter crime. Therefore, the cost of crime deterrence can be optimized by minimizing the total cost to society, which is the net cost of crime and the cost of crime deterrence.
The optimization level of crime suppression cost can be examined based on the relationship between crime level and cost, which represents the frequency and intensity of criminal behavior. Minimizing the total social cost of crime can be more clearly understood using the concept of economic marginal value. It is efficient to continue to increase the level of crime deterrence until the social cost of increasing the level of crime deterrence by one additional unit is equal to the additional social benefit. Beyond this level, crime deterrence becomes inefficient. Therefore, strict deterrence of crime does not necessarily lead to the optimal cost of deterrence.
In terms of crime deterrence, criminal sanctions are a means of deterring crime because they make people feel the pain or fear of punishment. Criminal sanctions are imposed when the behavior is socially undesirable in the sense that the harm to society outweighs the benefit to the actor. This does not mean that all behavior that harms society is targeted. However, it is often difficult to obtain accurate information about the benefit to the actor and the harm to society from a given behavior. For this reason, criminal sanctions need to be designed to take into account the imperfect information that law enforcement authorities have.
Let’s look at the optimal level of criminal sanctions by focusing on the deterrence function of criminal sanctions. For example, suppose that by committing an act that causes 10 social harms, each actor can expect a benefit of 50 for actor A, 4 for actor B, and 7 for actor C, and the maximum expected sanction is 5. However, suppose that the judicial authority can distinguish between actor A and actor B, but cannot distinguish between actor B and actor C. In other words, we know that the benefit of an act is 50 when there is a justifiable reason, such as self-defense, but we do not know whether it is 4 or 7 when there is no such reason. However, the behavior is deterred when the expected sanction is greater than or equal to the expected benefit, and the magnitude of the benefit and harm of the behavior is quantifiable.
In this case, the behavior of Class A can be judged as socially desirable. However, for non-Class A behaviors, we do not know whether they are Class B or Class C, so we can only apply the same sanction. If the expected sanction for them is 4, the B behavior will be deterred, but the C behavior will not be deterred. Increasing the expected sanction to 5, the maximum expected sanction, is inefficient because it doesn’t change the deterrent effect on B’s behavior and C’s behavior, but it costs more to sanction C’s behavior. If sanctions are eventually imposed, the optimal expected sanction in terms of cost is not 5, which is the maximum expected sanction, but 4, which is the lowest expected sanction that will deter B’s behavior. However, in some situations, a sanction of 0 may be the optimal expected sanction.
The above discussion is about how to choose a sanction strength, assuming that the sanction probability, or the probability of catching and punishing the offender, is given at a certain level. However, in the real world, there are situations where we need to consider both the probability of sanction and the actor’s characteristics. Consider the case where the sanction severity is 5 years in prison and the probability of sanction is 40%, versus the case where the sanction severity is 20 years in prison and the probability of sanction is 10%. In both cases, the expected sanction is 2 years in prison. If the actor considers both sanctions to be equivalent, i.e., a “risk-neutral actor,” they have the same criminal deterrent effect in either case. However, by reducing the probability of sanction from 40% to 10%, the cost of detection and arrest is reduced, so the latter, higher sanction and lower probability of sanction, is the more efficient deterrent.
However, if the actor is a “risk-preferring actor” who prefers a smaller probability of a larger sentence to a larger probability of a smaller sentence, then increasing the probability of sanction is a more effective deterrent than increasing the severity of the sanction. If a risk-preferring actor has a 40% probability of being sanctioned, then the sanction severity needs to be less than 5 years to have the same deterrent effect as if the sanction severity was 20 years in prison and the probability of being sanctioned was 10%. This reduces the cost of imposing sanctions.
In short, from a forensic and economic perspective, we can see that heavier penalties are not the only way to deter crime. Criminal policies that take social costs into account can be more effective in reducing crime. For example, increasing educational programs and reintegration support to prevent recidivism can be an important strategy. While this may be costly in the short term, it can contribute to lower crime rates and reduced social costs in the long term.
In addition, a forensic economic approach can help increase the fairness and effectiveness of criminal sanctions. By balancing social benefits and costs when designing legal sanctions, the credibility of the legal system is enhanced and societal resources are used more efficiently. The economic approach to crime deterrence offers a new direction for criminal policy and can contribute to the development of more effective and sustainable crime prevention strategies.
