Crime rates and expected sanctions: The economics of deterrence revisited

A higher expected sanction lowers the crime rate. This intuitive cornerstone of deterrence theory has garnered extensive theoretical and empirical research. The present study focuses on the opposite effects - the effects of the crime rate on the expected sanction. It turns out that these effects are versatile and rich in both the direction and the magnitude of their influence on the expected sanction. After analyzing these countereffects of the crime rate on the expected sanction, we present a new model of deterrence that explicitly incorporates the crime rate as one of the determinants of the expected sanction. The adjusted model is then used to study the effects of the crime rate on deterrence and on optimal law enforcement policy.