Select any topic covered in the course in Weeks 1 through 9. Write a 7 page paper modeled as a policy recommendation in which you: Briefly describe the economic problem you have selected. Discuss the...

Abstract
The paper discusses the issue of crime and crime prevention in society. The problem has been
analyzed with economic approach. Cost-benefit analysis has been used to explicate the decision
making process of criminals, and is analyzed to devise economic policy solution for controlling
crime by increasing the costs of crime. Further, sub-optimal provision of crime prevention has
een justified through the public good nature of this service; the role of government has been
devised in its optimal provision and extraction of resources from individuals through taxation to
prevent free rider problem. The last section presents some evidence of such policies which have
proved to increase the net benefits to society by controlling crime.
Introduction
The increasing criminal activities distort both the market efficiency and governance in an
economy. It is important to have a complete control on crime to ensure smooth functioning and
growth of economy. Policy framework for crime prevention initially involves deep study of
various questions, so that co
ection mechanisms could focus on the problematic aspect of the
issue. The economics of crime attempts to analyze the social problems relating to crime using
economic approaches. The first question that arises is that why people commit crime? The
second question is that why is crime prevention mechanisms inefficient? The third question is
what needs to be done to control crime completely? The economic approach to the first question
follows the cost-benefit analysis wherein the costs of committing a crime are compared to its
enefits for the criminal, and when the benefits exceed the costs, it is worthwhile for the criminal
to commit an offence (Becker, 1995). The economic approach to the third question presents the
public good nature of crime prevention, wherein people pay less than their marginal benefit from
crime control making the system inefficient (Sharp, Register, & Grimes). The economic
approach to the third question will involve assessing the ability of various policies in increasing
the cost of crime or introducing opportunity cost of committing crime. The analysis of these
questions shall help devise more effective policy measure that would ensure crime prevention
and efficient payment mechanism.
Crime and its costs to society and economy
A criminal act is one without which the society is believed to be better off. The crime could be
personal crime causing physical danger to the victim, and it could be property crime involving
stealth of an asset. There are various forms of social and economic costs attached with crime. A
transfer of property from property owner to the criminal involves loss in the value of that asset,
which is a dead-weight loss. Illegal trading in certain goods generates negative externalities that
distorts the market efficiency and causes damage to society. For example, trade in illegal drugs
leads to increased crime, poverty and spread o diseases. More importantly crime deteriorates the
faith of citizens in the government. The property crimes weaken the property rights system, and
challenge the authority of the government in protection of private property rights; so investors
are disincentivized to buy an asset that diminishes economic activity and hence economic growth
of the economy. So, a criminal act damages market efficiency and also hinders smooth
governance of economy. (Sharp, Register, & Grimes)
Cost-Benefit Analysis of criminal activities
Assuming that all the individuals are rational agents, it is justified to claim that individuals make
the decision to commit a crime by comparing its costs and benefits. If benefits exceed the costs,
then it would be worthwhile for an economic agent to engage in criminal act. It is easy to
understand that the benefits of a crime are, say, the value of the asset stolen in case of property
crimes, monetary benefits in case of forgeries or embezzlements, or psychic thrills and
satisfaction in case of personal crimes like murder or assault or rape. The costs of crime to the
criminal are of two forms: direct punishment costs and opportunity costs. If caught and punished,
the direct cost would be in form of physical pain, or fines, or isolation from society. The
opportunity cost is the amount that the criminal could have earned by employment instead of
spending the time and effort in the criminal act. For some individuals who are risk takers, the
enefits fare better than the costs, and hence it encourages the person to commit a crime. The
eason for this is hidden within the nature of the costs and benefits. One aspect is that the
enefits will be received at the time of crime, but the cost of punishment is, firstly, uncertain, and
secondly, generally comes forth after a long...