Economic Crime: Theory

The study of economic crime has had an uneven history. Over the last few centuries, writers have offered a variety of definitions of economic offenses and theories that use an economic approach to crime. Throughout this period, interest in economic crime and the economic approach to offending has ebbed and flowed. Its most recent revival begin at the end of the 1960s with Gary Becker's seminal work on a neoclassical approach to crime and more than thirty years later, economists, sociologists, and criminologists continue to use, revise, and argue about this perspective.

The debate over the economic approach to crime will undoubtedly continue as we learn more about the ways in which people interpret the costs and benefits of crime and how they use this information when choosing criminal behaviors over noncriminal ones. The relationships between crime rates, punishment patterns, and economic changes in the United States in the 1990s offer one example of this debate's longevity. From the mid-1970s until the early 1990s imprisonment rates expanded while the income disparity between rich and poor widened. Neoclassical theory suggests that these two trends would have opposite effects, with increasing imprisonment discouraging crime and increasing income inequality encouraging it. The latter effect may have been greater, as crime rates rose throughout much of this period. Moreover, some criminologists (see Fagan and Freeman) argue that the increase in imprisonment actually contributed to the increasing crime rate by diminishing its subjective costs (e.g., its perceived reputational and loss of income costs) even though its objective cost increased (e.g., actual certainty and severity of imprisonment rates). However, in the early 1990s crime in the United States began a long decline, a trend that began in an economic recession. To further complicate matters, the U.S. economic recovery of the midand late 1990s occurred in a period of continually expanding punishment. Only time will tell if the crime trends of ensuing decades support or refute the economic approach to offending.