Crime Rates and Expected Sanctions: The Economics of Deterrence Revisited

A higher expected sanction lowers the crime rate. This intuitive corner stone of deterrence theory has drawn extensive theoretical and empirical research. The present study focuses on the opposite effects- the effects of the crime rate on the expected sanction. It turns out that these effects are versatile and rich both in the direction and the magnitude of their influence on the expected sanction. After analyzing these counter effects of the crime rate on the expected sanction, we present a new model of deterrence, which explicitly incorporates the crime rate as one of the determinents of the expected sanction. The adjusted model is then used to study the effects of the crime rate on deterrence and on optimal law enforcement policy. JEL Classification: K42.