Scandinavian Working Papers in Economics

Research Papers in Economics,
Stockholm University, Department of Economics

No 2006:1: The Becker Paradox and Type I vs. Type II Errors in the Economics of Crime

Mats Persson () and Claes-Henric Siven ()
Additional contact information
Mats Persson: Institute for International Economic Studies, Postal: Institute for International Economic Studies, Stockholm University, S-106 91 Stockholm, Sweden
Claes-Henric Siven: Dept. of Economics, Stockholm University, Postal: Department of Economics, Stockholm University, S-106 91 Stockholm, Sweden

Abstract: Two real-world observations are not easily replicated in models of crime. First, although capital punishment is optimal in Becker’s (1968) model, it is rarely observed in the real world. Second, criminal procedure and the evaluation of evidence vary across societies and historical periods, the standard of proof being sometimes very high and sometimes quite low. In this paper, we develop a general equilibrium model of judicial procedure allowing for innocent persons being convicted. We show that the median voter theorem applies to this model, making judicial procedure endogenous. So formulated, the model can replicate both empirical observations.

Keywords: Criminal law; Judicial error; Burden of proof

JEL-codes: K40

36 pages, January 10, 2006

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