Monday, 1 July 2013

Crime, Gambling, Risk & Deterrence

At the end of my last Blog I brought up the issue of why the State doesn’t do more to bring about the near-eradication of crime by handing out extraordinarily harsh prison sentences.  I said I think I know why – but to look at this we first need to look at risk-taking in general.  A man who will break the law by answering his mobile phone whilst driving is a man who will willingly risk a possible fine (and points on his licence) rather than the certain inconvenience of having to pull over and delay his journey.  To a much different extent, a man who burgles your house probably just needs the money (often for drugs), so his risk-analysis is often not the same as the first man. 

To get another perspective on risks we can look at how people gamble.  As a former professional gambler (I use that term for simplicity’s sake – that’s not really what I was), I can tell you that the majority of people that spend their days making small bets in the bookmakers, and those that pump money into fruit machines for hours on end, are not really gamblers.  If you do either of those things for a sustained period of time you will be at a financial loss at a fairly predictable rate.  That is the opposite of gambling – because gambling doesn’t involve predictable rates – it involves risk and uncertainty.  A man who drives and uses his mobile phone whenever he feels like it is taking a risk – but just like a gambler his risk may pay off if the net cost of his fines is less than the net benefits of the calls and the time saved in making them on the road. 

Although people are criminals for a number of reasons (I’ve already alluded to drugs as one example), the rational criminal is someone who has chosen a life of crime because he prefers risks, and perceives a better pay-off than if he wasn’t taking risks.  If rational gamblers weren’t like this, they’d be shopkeepers, dentists, factory workers, waiters or mechanics instead.  Someone who plays the lottery likes low stakes, long odds and big pay-offs.  If lottery players weren’t like this they’d be buying scratch cards or in betting shops instead. 

If you want to understand the Government’s ethos regarding crime, you have to understand what attracts people to committing crimes – so it helps to understand what attracts people to gambling and to playing the lottery.  Surveys I’ve seen show that given the choice between twenty prizes of £500,000 or one prize of £10 million, most lottery players prefer the latter, because they prefer a small chance of a huge win rather than a better chance of a smaller win.  If you want to make the lottery more alluring (and sell more lottery tickets) then increase the size of the jackpot, because the kind of people who prefer a better chance of £500,000 aren’t playing the lottery to anything like as great an extent as those who prefer a small chance of £10 million. 

Lottery players don’t usually risk big stakes, which means lottery players are not like rational criminals - because rational criminals like risks, but they also think those risks enable them to beat the odds.  So while increasing the jackpot will attract lottery players, increasing the size of the prison sentence won’t have as much of an effect on criminals as increasing the conviction rate, because increasing the conviction rate will reduce their chances of beating the odds in a risky environment.  In other words, double the length of the prison sentences attached to every crime and crime will fall; double the conviction rate attached to every crime and crime will fall a lot further. 

In dog racing the kind of person who will be most attracted to a tri-cast (trifecta) bet of, say, 33/1 (predicting the first three dogs) is much more likely to be the kind of person who will quit when he gets that one big pay-off.  The kind of person who will be most attracted to betting £20 on a 6/4 dog is much more likely to be the kind of person who will place those winnings on the next race, and eventually come home at a loss.  Bookmakers have an interesting trade-off between these two kinds of customers; a big pay-off maximises the profit on the present race, while lots of small prizes maximise the action on the races to come. 

To summarise for clarification; lottery players are like tri-cast players - they prefer a small chance of a huge win.  They are like the rational criminals that prefer a small chance of a lengthy jail sentence - so if by reducing the one big jackpot on the lottery to twenty smaller jackpots you're going to deter people from playing the lottery, then by analogy to crime deterrence if the State increases the conviction rate by a significant degree it is going to deter a lot of rational criminals from committing crimes.  Of course, increasing the conviction rate is not entirely straightforward – the State has to prudently channel its resources into areas that will engender the highest conviction rates (police strategies, personnel, research, surveillance, etc).  As well as that it will have to assess the social costs of each crime and the relationship between that cost and number of occurrences; it will have to match the sentence to the crime; and it will have to calibrate whether enforcing a law is costlier than not enforcing it. 

So here's what I’d do if I had the power; I’d increase the sentences of the costliest crimes and invest lots of resources into increasing the conviction rates. This is an important balance to strike, because too harsh sentences can make a nation draconian and repressive.  If the State imposed a ten year prison sentence for using your mobile phone whilst driving, it would pretty much eradicate driving whilst on the phone, but such measures may have other negative effects on the country.  That said, a lifetime driving ban might be worth it - depending on how much of a social cost you think using your mobile phone whilst driving is on the rest of us.  The chances are you're unlikely to directly feel the costs of someone else using their mobile phone whilst driving, but you'll feel the full direct costs if you or someone you love dies as a result, or if your car is written off in an accident because of it.  Personally, given how easy it is to pull over, and how tragic it is to lose someone in a car accident, I'd value heavier punitive measures on people who risk others' lives in that way. Burglars, on the other hand, are not usually committing offences for the same reason that mobile phone drivers are committing offences - burglars are usually ensnared in a life of recidivism due to drug’s dependency, so even a drastic increase in the conviction rate won’t have a great effect unless there is better investment in rehabilitation. For this reason, and given the enormous social costs of drug-taking on society, I would come down much harder on drug dealers, and impose prohibitively harsh prison sentences for those dealing and supplying drugs. 

Radical Islam imposes huge costs on people when there are terrorist attacks, but even the spectre of it has costly externalities on our nation (not to mention the large resources spent in preventative measures and counter-terrorism activities) - so I would impose a very lengthy jail sentence for anyone conspiring to commit terrorist acts or caught preaching hate messages in the name of Islam.  I think people guilty of sex trafficking and crimes involving the rape and abuse of young girls after grooming should involve very lengthy jail sentences too.  

If you’ve noticed, what I’m proposing is tackling each crime according to its social cost, according to whether it is likely to re-occur, and according to whether the State ought to focus more on lengthier sentences or better conviction rates.  Better conviction rates will be more of a deterrent to driving offenders than it will be to burglars that sleep on the streets and are dependent on drugs, whereas better rehabilitative and educational measures will be better for drug-addicted burglars than it will driving offenders.  The combination of longer sentences (with full emphasis on education and rehabilitation) and better conviction rates will be better still (and best of all) in tackling the crimes that impose the highest social costs on our society, which is why the State’s hardest work (and biggest priority) is not in increasing prison sentences, it is in increasing conviction rates, and working extra hard to educate and rehabilitate by helping to instil senses of value and self-worth that are regretfully lacking in so many people. 

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