Stigma and Self-Fulfilling Expectations of Criminality

Eric Bennett Rasmusen, Kelley School of Business, Indiana University

Abstract

In modelling crime, economists have focussed on the expected cost of government sanctions to the criminal, but private sanctions--- notably economic or social stigma--- may be just as important. In the model here, workers decide whether to commit crimes and employers decide how much to pay ex- convicts. In one equilibrium, individuals refrain from crime and economic stigma--- the wage loss from conviction--- is high. In a second, pareto- inferior equilibrium, individuals commit crimes and stigma is low, because employers realize that nonconviction does not imply noncriminality. The model may help to explain large shifts in crime, such as that between 1960 and 1980, in which decreases and increases in government sanctions seem to have asymmetric effects.