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The Economics of Crime

When considering the criminal mind, many people make the mistake of not understanding how logical a life of crime can be. Most people choose a career by finding the meeting point between the work they can perform most readily and the work they can profit from most. That being said, the economics of crime deduces that a criminal simply chooses crime because it is the easiest job for the criminal that yields the most profit.

By studying the economics of crime, law enforcers can work to prevent crime not by making the criminal act impossible to perform, but instead by making it less profitable for the criminal seeking to perform it. In decreasing the profit of the crime, the motivation to pursue that line of crime becomes decreased as well.

This analysis can be applied to the most low-level crimes, such as mugging, to high-level crimes, such as organized crime. However, some common interpretations of the inner workings of organized crime could dismantle your understanding of the economics of organized crime. Rather than likening a criminal enterprise to a massive corporation, instead, think of it as a small business that frequently does business with other small businesses. In comparing a criminal enterprise to a network of businesses, the analyst gains a more profound insight into the economics of organized crime.

Applying economic principles to crime can also help to increase the effectiveness of law enforcement policies. Consider the concepts of supply and demand when approaching a criminal enterprise such as illegal drug trade. Lawmakers believe that in limiting the supply of drugs, they can reduce the demand for it; however, the means in which law enforcers attempt to limit the supply is questionable when dealing with the economics of crime. The common solution that lawmakers attempt is in eliminating the production of illegal drugs, so that the cost is driven up, and consumers are deterred from purchasing at the higher cost. Economic analysts have discovered that the cost of production and transport of illegal drugs is so small a fraction of the street price that this solution has too minimal an impact on the price to be effective.

Overall, the money that changes hands because of a crime does not seem to affect the social structure of the economy, because the same amount of money exists regardless of the means of procuring it. However, the increase in criminals does impact the number of producing individuals, which in turn influences the ability of legitimate business to provide the products and services to both thieves and law-abiding citizens. This means that over time, every member of society has fewer resources.

These are only a few examples of how approaching crime from an economic standpoint could become a vital method to generate solutions for lawmakers. A basic understanding of the economics of crime could assist more law enforcers in reducing crime by decreasing the profit for criminals and thus, making a life of crime less attractive.