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The effect of education on crime is one that usually
takes a criminological standing; Bentham (1843) was one of the first philosophers
to use economic calculus to introduce the concept of deterrence, and how if the
cost of committing a crime outweighs the benefits then people will not commit
crimes.  Becker (1968) then furthered
this approach and created one of the first fundamental literature which brought
an economic analysis to find means of combating criminal behaviour. Becker’s (1968)
theoretical essay aims to prove that increasing the cost of committing crimes leads
to less incentive to commit crimes. For instance, if an individual is convicted
of crime A, will this deter others from committing the same crime?  Becker (2013) believed the fundamental
instruments needed to deter crime where “the
likelihood that you’re going to apprehend and convict somebody, and the
magnitude and nature of the punishment that you impose”. However,
the framework of the deterrence hypothesis all depends on how elastic or
inelastic criminals are to punishment. If criminals are unresponsive to
punishment, fines and imprisonment will not deter them from committing crimes.

 

Bentham’s (1843) classical hypothesis which
states that “man avoids criminal behaviour
if that
behaviour elicits
swift ,severe and certain punishment”. New literature has criticised
this outdated approach because research has brought to light that this
is not necessarily the case, in the past when punishments have been more severe
crime has not decreased (Chiricos, Waldo 1970).  Another criticism of the deterrence hypothesis
is that the cost of implementing certain and increased punishments do not
outweigh the social benefits created through a reduction in crime.

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Due to the lack of evidence showing the
effectiveness in the Becker’s (1968) and Bentham’s (1843) deterrence hypothesis
the evolution of economics has changed to a more relevant method. This is
through social policies such as education, better opportunities and decreasing
unemployment.  These methods have been
shown to be effective through the findings of Lochner (2004) which will be
discussed further throughout this review.

 

A different approach to committing crimes is
in respect to incentives and whether the costs outweigh the benefits. Mincer’s Regression
(1974) was a large stepping stone for empirical economics “Mincers work has had a major influence on how
labour economists specify earnings relationships” Heckman, Lochner, Todd (2003). This model uses one earning
function on 50 years of data to explain two concepts, the rate of return to
schooling in terms of human capital investment and how labour markets use wage
to reward schooling and experience. These findings show that there
were higher wage returns for individual who attain higher education and experience,
this implies that attaining higher education will lead to better opportunities
in later life.                                                                                         However,
Heckman, Lochner, Todd (2003) later
represented a theoretical approach to assess Mincers Regression. Although
credit was given to Mincer for having a significant effect on labour economics,
their essay also criticised Mincer for being too simplistic. The reason being
that Mincer did not adjust his findings to taxes and tuition fees, also on some
data did not control for inflation. This led an overestimation in the
effect education has on wages.

 

The relationship between education and wages
(as assessed by Mincer) is fundamental in explaining why education influences crime.
Considering that crime is based around labour market incentives higher wages
raise the opportunity cost of committing crimes Groggor (1998). Relating back
to why crime affects education this is because “the income effect works through education increasing the returns to
legitimate work and/or raising the opportunity costs of illegal behaviour” Lochner
(2004). Another finding which is coherent with Lochner’s study is that wages
increase with age. Thus, providing an explanation to why crimes committed
decreased as the individual got older, 20% of crimes are committed by 15-19
year olds which make up only 6% of the population.                                                However, there are a few implications in
Groggor’s empirical study (1998). One example is that there is a gender bias as
the sample used was only made of young men. This gender bias means that their
findings cannot be generalised to women or older men. Regardless of Grogger’s
empirical approach, broadening the economics of crime by focusing more on wage
incentives rather than justice sanctions, this study does not give a direct
insight of the effect education has on crime.

 

In respect to how education effects crime,
attending better schools will reduce crime as seen in Deming empirical study
(2011). Children who won the admissions lottery and got into good high schools were
less likely to commit crimes. Deming (2011) also found that lottery winners
were half as likely to be incarcerated than non-lottery winners Deming (2011)
research saw a positive correlation between not winning the lottery and the
high school dropout rate. “Only 35% of in- mates in U.S. correctional
facilities earned a high school diploma or higher, compared with 82% of the
general population” which goes to show that most convicts drop out before
graduating. While this study is useful in showing a robust relationship between
education and crime, it is difficult to conclude if the relationship of
causation flows from education to crime and not the other way around.

 

A different approach is taken by Lochner and
Moretti (2004) by exploring the potential education has in reducing crime. His
findings show that violent crimes do not respond to incentives so wage would
not be a deciding factor on whether to commit the crime or not. However,
property crimes do respond to incentives that is why low skilled youths are
more likely to engage in crime early on in life because these youths seek
immediate rewards from illegitimate means. 
Jacob and Lofgren (2003) found that school enrolment leads to decreases
in property crime but does not affect violent crime. however violent crimes only
make up 20% of crimes whereas property crimes make up 70%.  Based on this data it is plausible to say that
the costs of one year extra schooling is nothing compared to the sizable social
benefits achieved by reducing crimes which is estimated to range between £54.1 and £62.7 million Machin et al. (2011).

 

Education changes an individual’s risk
aversion. By this we understand that the longer we wait for future returns the
higher the discount factor, so individuals with high patience and risk averse
will have a low discount factor on returns and vice versa. The more schooling
an individual has the higher their patient and risk aversion, therefore they
would place more of an importance on breaking the law in the future Lochner and
Moretti (2004). This finding was later backed by Machin et al. (2011) as his
theoretical also believed risk averse was a key mechanism in which linked the
inverse correlation of education and crime.
Lochner and Moretti’s (2004) study is strongly relevant within the fundamental
literature this was recognised by Deming (2011) as the best empirical evidence
study which shows relationship of education and crime.

 

Similarly, to the
latter Machin et al. (2011) empirically investigated how
education reduces crime, based on the compulsory school leaving age among
cohorts in England and wales. His theoretical framework studies three main
mechanisms income effect, risk aversion and time availability which are
estimated to cause a causal relationship between crime and education among
young. The findings are that a statistically significant reduction in property
crime among young males is associated with a higher compulsory leaving age.
However, there is no correlation found in the study between female property
crime and an additional year of education. The findings give a clear understanding
of the net social benefits which subsidising additional schooling brought about
for the cohort years in which experienced a change in law.  

 

Machin
et al. (2012) built on his earlier study by evaluating the education expansion
which occurred after the compulsory education age increase. The nature of this
expansion in education was linked to the productivity related to wage and
qualification attainment. After the GCSEs were introduced and improvement of
higher education exam results improved, higher education was rewarded with an
increase in wage returns. Did this expansion effect crime among youth?  “the solid line shows that male convictions rose
for the 1962 to 1971 cohorts, but fell very sharply for the education expansion
cohorts, and fell more slowly after that”. The males that received the expansion
committed less crime and therefore crime rates around these males dropped.
Suggesting a positive correlation between staying in education and not
committing crimes. However, the findings for women are noisier and although it
follows a similar relationship to the male cohorts the correlation is not as strong,
which is demonstrated throughout most research conducted and therefore expected
when looking at females and crime. These findings are significant in showing
that the fall in property crime was a result of the education expansion, which
was followed by upsurge in productivity and not solely because of the extra
compulsory year in education.

 

In line with previous
studies, Buonanno
(2007) studies how a non-market effect is excreted through education on crime
rate. They aim to take a different statistical approach through reducing the
effect of unobserved factors of schooling on education. Previous studies have
failed to do so, therefore leading to a biased estimator which has caused the
factor of schooling to be overestimated in reducing crime. After controlling
for labour market variables.  Buonanno
(2007) findings like that of Lochner and Moretti (2004), where that Education
has a negative correlation with property crime and that the effect of high
school graduation was significantly negatively correlated to crime whereas with
university and crime no significant correlation was found. Buonanno (2007) and
Lochner& Moretti (2004) retained the similar conclusions from their results
regardless of Buonanno study controlling for labour market variables. This
brings to question the direct relationship between education and crime, does
this negative correlation remains stable when socioeconomic and deterrence
factors are controlled?  It can be
assumed that the study conducted by Buonanno (2007) is useful as it gives
incite to the fact which education is less likely to be exogenous through the
controlling of socioeconomics factors.

 

An unusual approach
was taken by Campaniello, Gray, Giovanni Mastrobuoni
(2006) where they assessed not only the positive effects of
education on legitimate earnings but also on illegitimate earnings. The
narrative states that higher ranked mobsters are more likely to acquire higher
education in comparison to low ranked mobsters. This study focused on the
workings of the mafia organisation and its high-ranking members and the skills
which they needed for illegal
activities like “racketeering, extortion, loan sharking, etc. skills acquired
in education, like the ability to process numbers, to think logically, organize
complicated logistics systems”. These skills are likely to be increasingly
better with education, and seem to be fundamental in attaining high earnings in
the mafia.

Education presents an externality spill over, although
most literature focuses on the cost of schooling and the future benefits of the
student, and ignore the positive externalities created from primary education.
Through primary education one is taught the norms of society which forms them
to become a law-abiding citizen. Through Secondary and higher education, the
focus shifts to improving life skills and amplifying future opportunities Usher
(1993). The theoretical model presented in this study separates individuals
into two occupational categories: farmers (good) and bandits (bad). All
individuals have the same utilities and will pick the occupation which will
yields optimal consumption, education will make being a bandit unappealing
through higher labour market earnings. Usher (1993) concluded that one of the
externalities would be that Education increases earnings which decreases propensity
of crime, the social benefit of this is that education provide the means of an
honest life.  The civic finding in this
study which differs from other studies is that it focuses on primary education
which teaches children to prefer an honest life to being a criminal which usher
(1993) believes to be the biggest externality caused through education.

 

To summarise the literature Crime
reduction is a key public policy as it brings about social benefits. The
concept of reducing crime is a puzzle which many social scientists have tried
to solve out using empirical as well as theoretical approaches. All studies
tend to find a negative relationship between education and crime but struggle
in controlling all external variables which may affect this correlation.

Crime
is an increasing externality which creates high social costs, education is a
public policy which could decrease the knock-on effect of crime through
reducing it. Education has high private returns for the individual. Recently
studies have also shown the positive externality and spill over effect caused
by education which benefits society. The spill over of social benefits created
by education exceeds the private benefits, and outweighs the cost of
implementing policies of education. Making it 

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