Better Stealing Than Dealing: How do Felony Theft Thresholds Impact Crime?

Abstract

From 2005 to 2019, forty US states increased the dollar value threshold delineating misdemeanor and felony theft, reducing the expected punishment for a subset of property crimes. Using an event study framework, we observe significant and growing increases in theft after a state reform is passed. We then show that reduced sanctions for theft have broader effects in the market for illegal activity. Consistent with a mechanism of substitution across income-generating crimes, we find decreases in both drug distribution crimes and the probability that a released offender previously convicted of drug distribution is reincarcerated for a new drug conviction.

Keywords: crime, theft, felony, punishment

JEL Classification: K4, H0