5 - Crime, Conflict and spatial disparities

What are the two theory in relation of crime

Expected utility theory - Individuals weigh benefits against costs of crime - Italian bank robberies 2005-07 discouraged criminals with bigger sentences

Prospect theory - Offenders misperceive probabilities - should increase detection rather than sentencing - London riots (2011) harsher sentencing deterred certain crimes but shifted others

Whats the Becker model of crime

The becker model attempts to explain the rationality of crime by saying expected utility of crime > expected utility of not offending then crime will occur

probability of conviction and severity of conviction determine crime rate

What is the expected utility of the becker model of crime

pU(W1) + (1 − p)U(W2)
• where p is probability of conviction, W1 is wealth after penalty, W2 is wealth without conviction.

Draw a diagram and explain the becker model of crime

What are the two levers for policy makers and what are the elasticities of offending

Severity of punishment

Detection

How is the prospect theory different to the becker model

Takes into account peoples situation - more desperate more likely to commit crime no matter the punishment

Relative to current income or a reference point

Perceived possibilities - more sensitive to loss

Draw the prospect theory diagram and explain it

Concave for gains - risk averse when things are going to plan

Convex for losses - risk seeking when things are going bad

Steeper for losses than for gains

When below reference point - current income more willing to take risks

Summarise the prospect theory

Offenders more sensitive to detection probability than punishment severity

Certainty matters more than severity

Immediate automatic fines/ punishment matters more than a delayed court outcome for example

Income stability and employment prospects

Explain civil war onset in relation to income

Negatively correlated with income per capita

Opportunity cost lower of joining war as low wage

Weak fiscal and institutions means limited control

Is ethnicity differences cause for civil war

Maybe not but it is a coordination device to unite behind

Polarisation maybe a better explanation - group structure + grievances and opportunity

Main policy approaches to stabilisation

Peace building and state capacity: invest in institutions, policing and fiscal systems to restore governance

Education and jobs - higher opp cost

Security sector reform - policing

Aid conditionality and coordination

How can regional disparities be overcome`

Better transport - allows access to better jobs (Connecting capital and ideas)

What are agglomeration forces

Where workers and firms cluster to share knowledge, suppliers and markets

What are the positive externalities and dispersion forces to do with agglomeration

positive externalities include productivity gains from knowledge spillovers, labour market pooling (Skills matching), shared infrastructure and services

Increasing congestion due to commuting and transport friction costs, rising land and rent costs, lower trade and commute costs shift activity towards more accessible places

Why is spatial disparities a problem

Underutilisation of human capital and infrastructure in lagging areas

Can lead to inequality and discontent

Lagging areas will be trapped in low productivity outcomes

Can be solved by improved transport

Whats an example of this

The big sort - london and south east - high productivity

North Wales and north east lag behind

Due to skilled workers moving to high productivity areas from the lagging areas

What drives spatial sorting

Average ability in north falls if high skill move and low skill remain

No locational penalty - northerners earn same wage as southerners in the south