Crime, punishment and deterrence in Australia: A further empirical investigation

The economic theory of crime is based on the assumption that rational individuals act to maximize their utility given the possibility of allocating their time or resources to different activities (including crime). Withers (1984) represents the only significant, aggregative empirical analysis of the determinants of crime, and importance of general deterrence effects, in Australia, derived on the basis of this market model economic approach to criminal activity. Extends the economic analysis of crime in Australia by employing a rigorous approach to both the specification of the underlying economic model of crime and to the estimation of the statistical relationships in the data. Uses improved data measures ‐ notably sentence length ‐ that represent more suitable proxies for the theoretical concepts of interest. The inclusion of labour force participation as a highly significant explanatory factor represents a major specification improvement over earlier studies. Examines four categories of property crime in Australia over the period 1982‐1991. The findings provide significant support for a number of the postulates of the economic theory of crime. These include the negative, deterrence effect of both clearance rates (as a proxy for the probability of punishment) and expected sentence length (as a proxy for the severity of punishment) on the number of property crimes committed. Also finds a significant deterrence relationship between the aggregate unemployment rate and the labour force participation rate and certain categories of property crime. These findings provide important support for the market model of crime and the general deterrence hypothesis and opposition to the continuing prevalence of the simplistic sociological analysis of imprisonment and recidivism, which ignores general deterrence effects.