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Garoupa, Nuno
Martins, Ana Paula
Year of Publication: 
Series/Report no.: 
EERI Research Paper Series 07/2002
This research inspects the general implications of considering duration of confinement as a deduction to the convicted consumer-worker time endowment. Even if analytically simple, the model is able to shed some light on the expected wage profile of criminals, and the pattern of their preferences. The methodology used relies on the analysis of the crime-deterrent composite scheme, establishing the relation between required fines, duration of imprisonment, the monetary size of the offence, arrest probabilities and individual preferences and endowments. The main conclusions stem from the fact, proven below, that dissuasive seclusion or fines may decrease with the individuals' wage rate under a much wider range of consumer preferences than with non-labor earnings – for crimes for which seclusion length is high relative to fines. The intuition behind such conclusion lies on the fact that the money value of the opportunity costs of imprisonment is proportionally indexed to the individual's wage rate. Sensitivity of the deterrent sanction to uncertainty in the endowments distribution, as well as of dispersion in the sanction itself, was also inspected. It was found dependent on the pattern of individual preferences, particularly on how the response to a risk behaves in the presence of others. Corresponding risk measures were applied.
Risk and Uncertainty and Labor Supply
Criminal Behavior
Illegal Behavior
Crime Deterrence
Risk Aversion
Multivariate Risks
Document Type: 
Working Paper
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