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Article
Rewards versus Imprisonment
American Law and Economics Review
  • Murat C. Mungan, Texas A&M University School of Law
Document Type
Article
Publication Date
11-2021
ISSN
1465-7252
DOI
10.1093/aler/ahab011
Abstract

This article considers the possibility of simultaneously reducing crime, prison sentences, and the tax burden of financing the criminal justice system by introducing rewards, which operate by increasing quality of life outside of prison. Specifically, it proposes a procedure wherein a part of the imprisonment budget is redirected towards financing rewards. The feasibility of this procedure depends on how effectively the marginal imprisonment sentence reduces crime, the crime rate, the effectiveness of rewards, and how accurately the government can direct rewards towards individuals who are most responsive to such policies. A related welfare analysis reveals an advantage of rewards: they operate by transferring or creating wealth, whereas imprisonment destroys wealth. Thus, the conditions under which rewards are optimal are broader than those under which they can be used to jointly reduce crime, sentences, and taxes. With an exogenous [resp. endogenous] budget for law enforcement, it is optimal to use rewards when the imprisonment elasticity of crime is small [resp. the marginal cost of public funds is not high]. These conditions hold, implying that using rewards is optimal, in numerical examples generated by using estimates for key values from the empirical literature.

Num Pages
49
Publisher
American Law and Economics Association
Citation Information
Murat C. Mungan. "Rewards versus Imprisonment" American Law and Economics Review Vol. 23 Iss. 2 (2021) p. 432 - 480
Available at: http://works.bepress.com/mungan/72/