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Just out: Calvin’s Lemonade has filed in Federal Court for Bankruptsy. (see below) PowerPoint Presentation
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Just out: Calvin’s Lemonade has filed in Federal Court for Bankruptsy. (see below)

Just out: Calvin’s Lemonade has filed in Federal Court for Bankruptsy. (see below)

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Just out: Calvin’s Lemonade has filed in Federal Court for Bankruptsy. (see below)

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  1. Just out: Calvin’s Lemonade has filed in Federal Court for Bankruptsy. (see below) Previously, the Bailout Review Committee’s response had been: A suggestion that the firm might be a perfect candidate for Investment banking or the brokerage business-- following their earlier rejection that stated, in part, “If your firm’s status had been “Too big to fail” , we might have considered it.”

  2. Economic Opportunity and Crime

  3. Economic Opportunity and Crime A comment on the reason No. 216 could be in Prison: 1st Lesson of the Day Up until 2 years ago last December 24, my home had been burglarized 3 times. My insurance company, after the 3rd time, had suggested that we install an alarm, telling me we would get a discount on our insurance. On that afternoon at 4:30pm, a burglar broke in, not setting off the alarm. But, when he entered the master bedroom, it went off. The burglar fled. When the police arrived 6 minutes later, nothing appeared to have been taken. I had a few panes of glass to replace. Self Defense measures PAY !

  4. Economics 160 Lecture 5 It’s me again,Professor Votey Crime Generation: Youth and Women Notes:Votey, Lecture 3, 21

  5. Consider the Circular Flow Process: (again) • Depicting ( more elaborately) The Social Costs of Crime This is the Social Cost Of Crime Victim Costs +

  6. The Circular Flow Model in Symbolic Notation • Crime Generation:OF = g( CR, SV, SE) (1) • CR=Clearance Ratio • SV=Severity of Sentence • SE=Soc. & Econ. Conditions • Crime Control:(Lect. 3)CR = f( OF, L ) (2) • OF=Crime Load on the System • L =Law Enforcement Resources • Society’s ObjectiveMin. SC = r . OF + w . L (3) • where r = loss rate / Offense • w = resource price (police wage) • We might think of this as a social control model. • How does it relate to our notions of individual behavior? Note the circularity of the relationships Notes p. 21

  7. Recall Jeremy Bentham’s Notion of Individual Utility Maximization

  8. Recall Jeremy Bentham’s Notion of Individual Utility Maximization • The Individual will maximize:

  9. Recall Jeremy Bentham’s Notion of Individual Utility Maximization • The Individual will maximize:E (NB ) = E ( B ) - E ( C ) = $B .P ( B ) - $C . P ( C )

  10. Recall Jeremy Bentham’s Notion of Individual Utility Maximization • The Individual will maximize: E (NB ) = E ( B ) - E ( C ) = $B .P ( B ) - $C . P ( C )and will commit a crime

  11. Recall Jeremy Bentham’s Notion of Individual Utility Maximization • The Individual will maximize:E (NB ) = E ( B ) - E ( C ) = $B .P ( B ) - $C . P ( C ) and will commit a crime if E ( NB ) > 0

  12. Recall Jeremy Bentham’s Notion of Individual Utility Maximization • The Individual will maximize: E (NB ) = E ( B ) - E ( C ) = $B .P ( B ) - $C . P ( C ) and will commit a crime if E ( NB ) > 0 • Consider a potential criminal with two options:

  13. Recall Jeremy Bentham’s Notion of Individual Utility Maximization • The Individual will maximize: E (NB ) = E ( B ) - E ( C ) = $B .P ( B ) - $C . P ( C ) and will commit a crime if E ( NB ) > 0 • Consider a potential criminal with two options:A Crime:E(NB(Crime))= $Take . P(Not Jail))-$Jail . P(Jail)where P(Not Jail) = 1 - P(Jail)

  14. Recall Jeremy Bentham’s Notion of Individual Utility Maximization • The Individual will maximize: E (NB ) = E ( B ) - E ( C ) = $B .P ( B ) - $C . P ( C ) and will commit a crime if E ( NB ) > 0 • Consider a potential criminal with two options:A Crime:E(NB(Crime))= $Take . P(Not Jail))-$Jail . P(Jail) where Not Jail = 1 - P(Jail)An Honest Job:E(NB(Job)) = $wage . P(E) + $U . P(U)where E=Employed, U=Unempl, and P(E) = 1- P(U)

  15. Recall Jeremy Bentham’s Notion of Individual Utility Maximization • The Individual will maximize: E (NB ) = E ( B ) - E ( C ) = $B .P ( B ) - $C . P ( C ) and will commit a crime if E ( NB ) > 0 • Consider a potential criminal with two options:A Crime:E(NB(Crime))= $Take . P(Not Jail)) + $Jail . P(Jail) where Not Jail = 1 - P(Jail)An Honest Job:E(NB(Job)) = $wage . P(E) + $U . P(U) where E=Employed, U=Unempl, and P(E) = 1- P(U) • A Rational Individual will pick the Best Option

  16. Note that Using Bentham’s Analysis suggests a two pronged set of policy alternatives Raise the Cost of Jail (length of sentence) and / or Increase P(Arrest), P(Conviction|Arrest), P(Jail|Conviction) thru Crime Control Social Choice thru Crime Generation Lower P(Being Unemployed) and / or Raise Wages

  17. Two Views – or maybe three • The Rational Man Approach to Crime Control¹(Bentham’s Logic ) • Many Modern Criminologists 2(Rejecting Bentham) • The Liberal Rational Man3(Bentham’s Logic Extended) ¹ Deterrence Works – Use the threat of Punishment ² Deterrence Doesn’t Work –(Rely on the Imprisonment Model)Two of our early supporters, criminologists, didn’t reject Bentham’s view ³ Deterrence Works, but so do Economic Opportunities (In Today’s World this might have been Bentham’s View) Not Don Cressey, Dan Glaser

  18. Some Personal Questions in Regard to Career Choice

  19. Some Personal Questions in Regard to Career Choice • Not for the record

  20. The Charles Schultz Perspective

  21. At this point, we are – Back to Positive Economics • A little bit like detective work • A detective’s job is to solve a crimeso that the prosecutor can deal with the criminal • Our task was to explain criminal behavior • So that Public Policy could be modified|to reduce the likelihood of crime • The same sort of stimulus was facing Steven Levitt when he wrote his book

  22. Consider Crimes Committed by Youth: We Note That: • Crime involvement greatest among youth

  23. Based on FBI, Uniform Crime Reports Cities of the U.S., By Type of Offense, By Age p. 23

  24. Consider Crimes Committed by Youth: We Note That: • Crime involvement greatest among youth • Historically Crime has been predominantly a malephenomenon

  25. Relatively few offenders were female % Females in group All arrests (adults and juveniles) 17% Index crime arrests 21 Violent crime arrests 11 Property crime arrests 24 Larceny 31 Non larceny 8 Report to the Nation, 2nd Edit., p. 46 (Incarceration Data from 1984)

  26. Consider Crimes Committed by Youth: We Note That: • Crime involvement greatest among youth • Historically Crime has been predominantly a malephenomenon (I will talk further about women’s increasing involvement in crime.)

  27. Consider Crimes Committed by Youth: We Note That: • Crime involvement greatest among youth • Historically Crime has been predominantly a malephenomenon • Crime is more prevalent in the cities

  28. Who are the victims of violent crime? Rates per 1,000 persons age 12 and older____ Residence (1984) RobberyAssaultRape Central City 11 31 1 Suburban 5 24 1 Rural 3 19 1 Report to the Nation, 2nd Edit., p. 27

  29. Consider Crimes Committed by Youth: We Note That: • Non-whites are more thanproportionately involved* • Crime involvement greatest among youth • Crime is more prevalent in the cities • Historically Crime has been predominantly a male phenomenon. * The studies, that we conducted, began in the late 60’s and the data available distinguished between whites and non-whites. Later, available data accounted for Hispanics as well.

  30. Notes p.30

  31. In our earliest analysis of youth participation in crime, we believed that a primary cause was lack of economic opportunities. • Supporting that, later studies revealed that when economic opportunities were taken into account, black participation in crime was found to be less significant to non-signicant. • Race variables, in effect, were proxies for a state of limited economic opportunities. • Crime is inevitably higher in poor neighborhoods and such variation also is likely to reflect income differentials between central cities and other residential locations.

  32. Consider the picture of economic opportunities for youth • Youth unemployment rates are high relative to those of older workers.Unemployment Rate = Persons actively seeking work Labor Force

  33. Notes p. 26

  34. Consider the picture of economic opportunities for youth • Youth unemployment rates are high relative to those of older workers.Unempl. Rate = Persons actively seeking work Labor Force • What has been the effect of higher unemploymentrates for youth ?

  35. Consider the picture of economic opportunities for youth • Youth unemployment rates are high relative to those of older workers.Unempl. Rate = Persons actively seeking work Labor Force • What has been the effect of higher unemploymentrates for youth ?1. A decline in their Labor Force Participation Rates Age Specific =No. Empl. or Seeking Work (Age) LFPR Population (Age)

  36. Recall that, in my previous lecture, I showed that a factor in the growth of crime was a decline in police effectiveness starting in the mid-fifties. Here we see another factor that is important, This is labor market data (BLS). The decline in the Labor Force Participation Rate Philip Cook didn’t understand that the unemployment rate doesn’t tell the full story This is a clue to understanding Crime Participation Notes p. 26

  37. Consider the picture of economic opportunities for youth Youth unemployment rates are high relative to those of older workers. Unempl. Rate = Persons actively seeking work Labor Force What has been the effect of higher unemploymentrates for youth ? 1. A decline in their Labor Force Participation Rates Age Specific = No. Employed or Seeking Work (Age) LFPR Population (Age) 2. Youth invest in schooling to get a better job, stay out of the labor force temporarily.

  38. An Important Elaboration Here • Prof. Phillips showed video of Phil Cook, Duke Univ., saying unemployment didn’t have much to do with crime patterns. • There was something he didn’t understand: the factors affecting youth in this period. • He wasn’t alone in not understanding the link between jobs and crime.

  39. Notes p. 34

  40. I was getting some BLS data over the weekend to demonstrate this • But, in the middle of that, their data base access was cut off. • The data did show that the series for whites and non-whites (the BLS designations) show that youth responded differently to the labor market conditions. • The fact was that market changes affected them differently • And, consequently, their participation in crime was different. The changes continued to be according to what we had anticipated • And enrollment rates at higher education grew more slowly for non-whites, ultimately declining for both as living costs rose

  41. Testing the Hypothesis that Crime Rates for youth are related to economic opportunities The Population of 18-19 year olds This figure in Notes, p.32 AS IP Persons committing crimes EMPL NLF UNEM These relationships can be stated in terms of probabilities

  42. AS IP EMPL NLF UNEM

  43. Our Hypothesis: Crimes by youth are a function of lack of legitimate economic opportunities - as a probability statement: Notes, p.41 We start by simply describing the relationships illustrated in the Venn Diagram of Fig. 3.6 as a probability statement:

  44. The Hypothesis: Crimes by youth are a function of lack of legitimate economic opportunities - as a probability statement: Notes, p.35 • We start by simply describing the relationships illustrated in the Venn Diagram of Fig. 3.6 as a probability statement: AS IP EMPL NLF UNEM

  45. The Hypothesis: Crimes by youth are a function of lack of legitimate economic opportunities - as a probability statement: We start by simply describing the relationships illustrated in the Venn Diagram of Fig. 3.6 as a probability statement: P(Commit Crime) = P(Commit Crime and EMPL) + AS IP EMPL NLF UNEM

  46. The Hypothesis: Crimes by youth are a function of lack of legitimate economic opportunities - as a probability statement: We start by simply describing the relationships illustrated in the Venn Diagram of Fig. 3.6 as a probability statement: P(Commit Crime) = P(Commit Crime and EMPL) + AS IP EMPL NLF UNEM

  47. The Hypothesis: Crimes by youth are a function of lack of legitimate economic opportunities - as a probability statement: We start by simply describing the relationships illustrated in the Venn Diagram of Fig. 3.6 as a probability statement: P(Commit Crime) = P(Commit Crime and EMPL) + P(Commit Crime and UNEM) + AS IP EMPL NLF UNEM

  48. The Hypothesis: Crimes by youth are a function of lack of legitimate economic opportunities - as a probability statement: We start by simply describing the relationships illustrated in the Venn Diagram of Fig. 3.6 as a probability statement: P(Commit Crime) = P(Commit Crime and EMPL) + P(Commit Crime and UNEM) + AS IP EMPL NLF UNEM

  49. The Hypothesis: Crimes by youth are a function of lack of legitimate economic opportunities - as a probability statement: We start by simply describing the relationships illustrated in the Venn Diagram of Fig. 3.6 as a probability statement: P(Commit Crime) = P(Commit Crime and EMPL) + P(Commit Crime and UNEM) + P(Commit Crime and NLF) + P(other) AS IP EMPL NLF UNEM

  50. The Hypothesis: Crimes by youth are a function of lack of legitimate economic opportunities - as a probability statement: We start by simply describing the relationships illustrated in the Venn Diagram of Fig. 3.6 as a probability statement: P(Commit Crime) = P(Commit Crime and EMPL) + P(Commit Crime and UNEM) + P(Commit Crime and NLF) + P(other) AS IP EMPL NLF UNEM