Is policing some crimes optimal?

When someone gets robbed there are some direct costs and benefits. Firstly, the perpetrator receives the goods and or services, and may also derive some pleasure from the activity itself. Secondly the victim suffers the loss of goods and services, and is hurt by the fact they have become a victim.

If this crime is reported to the police and solved successfully then there are a number of losers. Society has to pay the police to solve the crime, the criminal loses any goods and has to pay/go to jail, and the victim loses a significant amount of time making statements etc. Most people that have a criminal case against them try to get a criminal defense lawyer, I suggest talking to Chambers Legal or the criminal lawyers Roanoke. In some cases, the time cost to the victim turns out to be greater than the benefit from having the crime solved (these are the people that regret having taken their case to the police). The folks at Liberty Bell Law criminal attorney Los Angeles CA, though, make it a point that crime is brought to books and justice delivered as quickly as possible.

In some cases, this type of outcome is quite common (eg for small traffic accidents), and the only reason people initially go to the police is because they don’t realise how large the effort and time cost will be (often as a result of mis-information). If this is the case, then everyone loses from a crime being reported and solved, implying that it would have been better if the crime was never reported.

However, this logic feels like it has something missing. Why would police be trained to under-sell the costs associated with reporting these crimes unless there was some good reason for it?

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Return to sender

Dwindling natural resources and increasing consumption are global problems that get plenty of airtime these days. So where do all the metals extracted and ‘consumed’ go? Well, apparently they end up in dumps in Japan:

Despite perception of Japan being short of natural resources, “urban mines” mean the country actually possesses world-leading amounts of rare metals such as gold, silver, lead and indium… in discarded items such as cars or electrical equipment. Japan’s urban mines contain about 61 percent of known natural indium reserves, 22 percent of natural silver reserves, 16 percent of natural gold reserves and 10 percent of natural lead reserves.

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Biased impartiality in the media

Half the internet seems to be talking about the US Presidential primaries at the moment, so Jeremy Burke’s work on media bias seems particularly pertinent. I might talk about his other papers another time but the one that’s captured my attention today addresses the myth that balanced media coverage is equivalent to fair coverage.

It is usually accepted that the media should provide unbiased coverage of events and issues. Unfortunately it is difficult for the reader to tell how biased the coverage is if they have no prior information about the issues being reported. In the absence of further information it can appear that coverage which reports both sides of a contentious issue is the least biased. In the competitive world of large media conglomerates a reputation for accurate, unbiased coverage is essential. The competition drives reporters to appear impartial by simply reporting the arguments provided on each side of a debate. Of course, providing both sides of an issue and reporting it in an unbiased fashion are not always the same thing.
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Higher minimum wage – higher employment?

Over at Not Sneaky they are discussing how a higher minimum wage may lead to higher employment when we have a firm that has market power in the labour market (hat-tip CPW). The argument is a very interesting one as economists often view a minimum wage as a way of placing a price floor, which leads to a lower level of employment and social ‘surplus’.

On the blog he uses this fine graph to explain the result. The purple line illustrates the path of wages and employment. According to that, there is a range where higher wages create greater employment in the labour market. Let me attempt to explain this.

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Relative prices and GST

Over time we have been covering specific issues with how income tax and GST influence economic activity. This post was supposed to describe how an increase in GST with a proportional decrease in a flat income tax would lead to no change in consumer activity. This required the assumption that the incidence of tax on the household in both cases was equal, which will not be true.

Next we discussed the incidence of income tax in this post, which allowed us to say that some of the burden of the tax falls on labour, but some also falls on the firms that employ workers. The next step is to look at the incidence associated with a goods and services tax, and some of the inefficiencies that this issue causes for this tax type. Read more

Too much of a good thing?

My attention has been drawn (thanks Paul) to an article which describes how one might find the optimal number of members of parliament in a representative democracy.

In a nutshell, a parliament with too few representatives is not “democratic” enough, possibly leading to an unstable political system, in which various undesirable forms of political expression, including of course violent ones, will develop. In contrast, too many representatives entail substantial direct and indirect social costs, they tend to vote too many acts, interfere too much with the operation of markets, increase red tape and create many opportunities for influence, rent-seeking activities and corruption.

In their paper the authors derive a formula in which the optimal number of representatives is approximately proportional to the square root of the population of the country.

They test their formula against the data and find that Israel, New Zealand, the Netherlands and the USA have far too few representatives. I’m not sure how this correlates with their predictions about the instability of under-represented democracies: all four countries are very stable, non-violent democracies as far as I’m aware. I don’t have access to the CEPR paper but I’d be curious as to whether they address this issue. Their model makes some predictions which are easily falsifiable and I’d like to know how it stacks up against the evidence.