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Jobs and Crime

Jobs and Crime. Week One: Tuesday & Thursday. Summary for Lecture Two. Crime is an economic problem loss of resources(dead weight loss) from private and public defense (graphical economic analysis)

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Jobs and Crime

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  1. Jobs and Crime

  2. Week One: Tuesday & Thursday

  3. Summary for Lecture Two Crime is an economic problem loss of resources(dead weight loss) from private and public defense (graphical economic analysis) Damages to victims are 3 times as high for crimes against persons compared to crimes against property Total for 7 FBI Index Crimes: $ 95 Billion (93 $) Shouldn’t society focus more on big ticket fraud: Enron, WorldCom, Bernard Madoff Investment Securities LLC?

  4. Today • Policy Issue: Gun Laws • Seriousness ratings for ten behaviors • How much would you pay to prevent your bike being stolen? • Experimental issue: Do economic conditions cause crime?

  5. How to study for this course! • Lecture course: go to lectures • No section and no TA • Look at outline slide at the beginning of each lecture with the major points and a summary slide at the end of each PowerPoint with the major points • Be familiar with the graphical analysis in the class notes & the PowerPoints • Look at last Winter’s (2011) midterm for clues • Read (listen, look, Google) the news and keep up with criminal justice system stories

  6. Example:Summary for Lecture Two Crime is an economic problem loss of resources(dead weight loss) from private and public defense Damages to victims are 3 times as high for crimes against persons compared to crimes against property Total for 7 FBI Index Crimes: $ 95 Billion (93 $) Shouldn’t society focus more on big ticket fraud: Enron, WorldCom, Bernard Madoff Investment Securities LLC?

  7. Example: Outline and Issues for Lecture Two Course logistics: gauchospace Criminal Justice System (CJS) & economic paradigm: where do the values (prices) come from to evaluate the states (outcomes) of the CJS? How much crime is there? How do we know? Crime has two effects: Redistribution of welfare from the victim to the perpetrator Opportunity cost or waste of resources for defense

  8. The Graphics of Total Cost, TCTC = r*OF + E Total Cost (E) $ • Economic Paradigm • Choose objective • e. g. minimize sum of • damages to victims plus • expenditures, E, on CJS • 2. Describe states of the world • (options for choice) • Total cost curve (E) • 3. Choose the best option Minimum Cost E on CJS Optimal Expenditure 8

  9. Midterm • 40 • 20 • 40 • 50

  10. Stories still in the news • Congresswoman Gabrielle Giffords

  11. What is the gun law in Arizona? • Q: Is there a waiting period on gun sales? • Q: Are handgun buyers required to complete safety training? • Q: Is it required that you register all of your guns with law enforcement? • Q: Are background checks required at gun shows? • Q: Do state police and federal NICS perform a background check?

  12. What is the gun law in Arizona? • Q: Is it mandatory that locking devices be sold with guns? • Q: Is a license or permit required to buy handguns? • Q: Are background checks required on 'private' gun sales? • Q: Are there any restrictions regarding minors possessing guns? • Q: May the police limit carrying concealed handguns?

  13. A theme for this course • US and CA criminal justice systems will be case studies, but are there larger issues about the public sector?

  14. Public Sector Health Safety Civics Education

  15. What determines the quality of life in a nation, a state or a locality? • The distribution of GDP between the public and private sectors?

  16. Total Tax Burden As % of GDP, 2004Google Forbes overall tax burden

  17. Public Vs. Private Goods Production Function Contraint Labor for Private Goods Private Goods Labor for Public Goods Labor, Private

  18. Production Possibility Frontier Output, Private L, Private Output, Public L, public

  19. Production Possibility Frontier Output, Private L, Private Output, Public L, public

  20. Private Mexico US Canada UK Sweden Public

  21. Production Possibility Frontier Does the global economy Cause a bias towards Private instead of public Goods and services? PRIVATE Inefficient PUBLIC

  22. Production Possibility Frontier Does being the world’s Policeman cause a bias Away from other public Goods and services? Public Goods: Defense Inefficient Public Goods: Health

  23. Expenditures Per Pupil

  24. Production Possibility Frontier Which would you rather do (1) keep the 30% of state prisoners who are pot-heads locked up, or (2) educate your kids? Public Goods: Prison Operation Inefficient Public Goods: education

  25. US Politics • “It’s the economy stupid!” • Issues in 2008, 2009, 2010, & 2011 • Human capital and education • The family and social conservatives I will argue that the issues of family and education are connected

  26. 7.2% 29.6%

  27. 5.8% 7.2/5.8 ~ 26% rise 33.8%

  28. The Economy and Crime • Is crime affected by the business cycle? • Do economic factors cause crime?

  29. www.econsnapshot.wordpress.com

  30. Where is the economy headed?Survey of Professional Forecastershttp://www.phil.frb.org/files/spf/survq407.html

  31. The forecasters can be wrong! • A day late and a dollar short

  32. California Forecasts & Record: Umemployment rate: CA Dept. of Finance

  33. Jobs and Crime

  34. Questions About Crime • Does the Business Cycle Affect Crime Rates? • Does an Individual’s Life Cycle Affect Crime Rates? • Why do some people live socially unproductive lives?

  35. Two Points About Economic Conditions and Crime • Relationship of Crime to the Business Cycle • Short Run: Business Cycle • Is Phil Cook wrong? • California: the misery index and crime • misery index = unemployment rate + inflation rate • Relationship of Crime to the Life Cycle • Long Run • Investment in Education • Role of the Family

  36. Why do people work in labor market? • Tastes? • Assume everybody has the same tastes! • Human capital: earning power • Education • Work experience • Health

  37. An Individual’s Life Cycle for a Socially Productive Life • Learning over the life cycle • Accumulating earning power or human capital • Earnings depend upon • ability • knowledge • work experience • health

  38. Productive Life Cycle Social Institution Family - PreSchool - School - College - Job - Retirement Function Learning: Accumulating Human Capital - Earning - Spending Age Line 0 4 6 18 23 65

  39. Accumulating Human Capital Inflow Outflow Stock

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