Radar Detectors, Fixed and Variable Costs of Crime

Abstract:     
Raising the sanction will always reduce the utility of the criminal. However, raising the sanction will not always lead to less crime, and may lead to more crime. If a criminal has the opportunity to commit multiple criminal acts and has fixed and variable costs of committing these acts, then an increase in the criminal sanction, over a certain range of sanctions, may actually lead the criminal to commit more crime. The reason is that as the sanction is increased, the criminal may increase his expenditures on fixed costs, which may decrease his variable costs of committing a criminal act. Once the criminal pays his fixed costs, they will be sunk costs, and thus they will no longer enter into the criminal's decision process of committing criminal acts. But the variable cost of crime will enter into the criminal's decision process. If raising the sanction leads to decreasing variable costs of crime then raising the sanction may actually lead to more crime. The example of the criminal's decision to purchase a radar detector and to speed is used to illustrate the point.

JEL Classifications: J29, K14

Working Paper Series