An occupational choice model of crime switching

Abstract

A quasi-linear, additively separable utility function is used to describe preferences between consumption and leisure and analyse occupational choice between one non-criminal and two criminal activities when individuals are heterogeneous in terms of their productivity. Occupational specialization takes place at the individual level according to their relative productivity in various activities. The aggregate amount of criminal activity features crime switching; the criminal activity depends negatively on its probability of detection, its penalty rate if caught and on the rate of return from alternative criminal activity and positively on the probability of detection and penalty rate of alternative criminal activity. Some empirical evidence from Finland about auto thefts and robberies lies in conformity with crime-switching hypothesis.