Dynamics of Deterrence:

A Macroeconomic Perspective on Punitive Justice Policy

January 11, 2019

Project Summary

It may take many years for the full effects of a particular policy change to become fully evident. As a result, short-run analysis of criminal justice policies may give an incomplete or misleading picture of the true consequences of tough-on-crime policies. In this research, the authors present evidence of a “lost cohort” of individuals born in the mid-to-late 1960s—individuals who reached the prime crime age of their twenties in the 1980s—who have higher rates of prison admission and arrests throughout their lives compared to the generations before and after theirs. In short, the authors identify that incarceration policies may have a deterrent effect on future generations, but these policies also have a punitive effect immediately after enactment.

Changing Incentives
The authors develop a quantitative model to examine the dynamics of crime and incarceration following a permanent increase in tough-on-crime policies beginning in the 1980s. They find:

  • Based on a simulated increase in the probability of incarceration, weekly crimes per capita fall sharply in the first five years. After a decade, however, this decrease becomes less severe due to higher deterrence of new generations.
  • They also find that crime becomes more concentrated among career criminals.

Labor Market Impacts
The authors find that, in the short term, the employment-to-population ratio falls by 1.5 percent, but then fully recovers in the long term. However, their findings indicate that changes to incarceration policies have large and permanent effects on inequality due to criminal records:

  • The average wage of those with a criminal record falls by 7 to 8 percent.
  • Employment for those with a criminal record falls by 7 percent in the short run and 3 percent in the long run.

Key Takeaway
As the authors note, policy design must consider how the costs of sharp policy changes are borne across society. Doing so would allow for policy designs that may achieve their deterrent goals without unduly punishing those caught within a particular policy change.