Crime and punishment: Does it pay to punish?

Crime is the result of a rational distinctive balance between the benefits and costs of an illegal act. This idea was proposed by Becker more than forty years ago (Becker (1968)[1]). In this paper, we simulate a simple artificial society, in which agents earn fixed wages and can augment (or lose) wealth as a result of a successful (or not) act of crime. The probability of apprehension depends on the gravity of the crime, and the punishment takes the form of imprisonment and fines. We study the costs of the law enforcement system required for keeping crime within acceptable limits, and compare it with the harm produced by crime. A sharp phase transition is observed as a function of the probability of punishment, and this transition exhibits a clear hysteresis effect, suggesting that the cost of reversing a deteriorated situation might be much higher than that of maintaining a relatively low level of delinquency. Besides, we analyze economic consequences that arise from crimes under different scenarios of criminal activity and probabilities of apprehension. (C) 2012 Elsevier B.V. All rights reserved.