Determining the most effective way to deter deliberate crimes, such as fraud, as opposed to impulsive crimes, such as crimes of passion, is a problem currently being debated in the legal community. On one side of the debate are those scholars who believe that deliberate crimes are a product of the influence an economic principle that shows that these two positions, far from being antithetical, are surprisingly complementary.
The economic principle that reconciles the two positions is that of utility maximization, which holds that, given a choice of actions, rational individuals will choose the action that maximizes their anticipated overall satisfaction, or expected utility. The expected utility of an action is ascertained by determining the utilities of the possible outcomes individual’s decision to commit a crime can be analyzed as a rational economic choice.
According to the utility maximization principle a person who responds rationally to economic incentives or disincentives will commit a crime if the expected utility from doing so, given the chance of getting caught, exceeds the expected utility from activity that is lawful. Within this framework the two crime-deterrence methods have the same conflict, and that the optimal approach to crime deterrence would include elements of both deterrence strategies.
What this question is testing
Topic
The author is showing how two camps that seem to disagree about deterring deliberate crimes (like fraud) can actually be reconciled — they're both right.
Framework
Problem-Solution.
Main Point
The simpler version: there are two camps. One says deliberate crime is caused by social conditions, so the fix is changing beliefs and giving people more economic opportunity. The other says it's a personal choice, so the fix is harsher penalties and better enforcement. The author says: you can use a basic economic idea — utility maximization — to show that both approaches actually work, just from different angles. So the best policy uses both.
P1: The two camps and the bridge
Camp 1: society causes crime, so change conditions. Camp 2: people choose to commit crimes, so make crime more costly. A new economic idea reconciles them.
P2: The economic idea
Utility maximization just means: rational people pick the option with the highest expected payoff (taking risk into account). You can apply this to a person deciding whether to commit a crime.
P3: How both camps fit
If a rational person commits a crime when crime's expected payoff exceeds the legal life's expected payoff, then there are two ways to flip the math. Make crime worse (raise enforcement, raise penalties — Camp 2). Make legal life better (more economic opportunity — Camp 1). Both work. The best policy uses both.
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