The Effects of the Severity of Punishment on Crime: A Case

Study of the Virginia Judicial System

Econ 594/595 Major Paper

Haseeb Ali #85114122

Vancouver School of Economics, UBC

August 2, 2013

Abstract

Rationalizing criminal behavior provides great opportunities for policy makers to reduce
crime. Understanding the decision making process of criminals by identifying how they respond
to changes in the severity of punishment is one key aspect of this broad field of research.
Traditional approaches for identifying this response often suffer from endogeneity problems,
especially when more violent regions adopt more severe punishments. A quasi-experimental
approach is used to analyze criminal data from the U.S. state of Virginia, where a policy that
reduced the severity of punishment was implemented in two stages. Using a difference-in-
difference framework, crime rates in two groups of judicial districts are tracked over time in an
attempt to infer criminal response to policy that was targeted towards non-violent offences.
Increased rates of larceny and motor vehicle theft, both non-violent crimes, are observed, while
little evidence for changes in the rates of violent crimes of burglary and robbery. Due to the
policy coinciding with the U.S. recession of the early 2000s, it is not possible to conclusively say
that these responses were a result of the punishment reducing policy.
Introduction:
The economic study of criminal behavior originated with the work of Gary Becker (1968).

Becker asks, how much punishment should be used to enforce different kinds of legislation?

This question is of great importance in the United States today. The U.S. has the highest

incarceration rates in the world, with 716 out of 100,000 individuals in prisons and jails in 2011.

American lawmakers, answered Beckers question with the upper end of the punishment

spectrum. Faced with budget deficits at all levels of government, efforts have been made to slow

the growth of and reduce the prison population, due to the large expenses associated with

incarcerating individuals.

One such effort has been made in the state of Virginia, where incarceration rates for non-

violent offenders has specifically been targeted in an attempt to reduce prison populations. Due

to high crime rates in the 1990s (Richmond, the capital of Virginia had one of the highest murder

rates in the country), crime was a pressing issue in Virginian politics. In 1994, the Virginia

General Assembly passed what are known as the truth in sentencing reforms, aimed at

targeting violent criminals posing the greatest danger to society. These reforms were meant to

accomplish four general goals: to increase prison sentences for violent and repeat offenders, to

abolish parole, to reduce good time allowances and to divert 25% of select nonviolent prison

bound offenders to alternative sanctions. The first three of these reforms, due to their relative

ease of implementation, quickly went into effect on January 1st, 1995. However, diversion of 25%

of the prison population required a longer timeframe to implement. The goal of the policy was

meant to reduce the expansion of the prison population that would result from the harsher

penalties imposed on those who committed violent crimes. To evaluate which 25% of non-

violent criminals were to be selected for alternative penalties, Virginia assessed the risk of
recidivism; much like an actuary would try to predict the likelihood of some even occurring in a

certain individuals life, such as getting into a car accident. Risk of recidivism is evaluated

according to an individuals characteristics (including but not limited to age, past criminal

history, employment and marital history). A threshold corresponding to 25% of the non-violent

criminal population is determined, and those below this threshold are either punished with

shorter incarcerations or given alternative sanctions. Alternative sanctions include (but are not

limited to) supervised and unsupervised probation, restitution, a suspended license and electronic

monitoring. This risk assessment as a means of determining who gets sent to prison is something

that is completely unique to the state of Virginia. As an effective tool this program had to

balance its objectives of reducing the prison population, and minimizing the rate of recidivism

for those who are alternatively sanctioned. If rates of recidivism are negatively correlated with

the severity of punishment, but if recidivism increases only marginally with the alternate

sanction as opposed to incarceration, the benefits from reduced costs from the alternate sanction

will outweigh the harm done from reduced incarceration.

The policy was first implemented in six judicial districts that served as pilot sites for the

testing of the policy. Figure 1 shows the original six districts in which the risk assessment tool

was first implemented. After the trial ran in the six judicial districts, the policy was implemented

statewide on July 1st, 2003. The policy effectively resulted in a reduced severity of punishment

for non-violent criminal acts for a certain sub-section of the criminal population. The focus of

this thesis is to determine whether this policy causes criminals (or potential criminals) to increase

non-violent criminal behavior. Secondly, this study explores the potential for substitution from

violent crimes towards non-violent crime. Does a reduction in the severity of punishment in non-

violent crime lead to a reduction in violent crime? One example is that of a criminal deciding
whether to pack a handgun for his/her night out on the job. Having a gun aids in committing a

crime, if the opportunity so arises. However, the opportunity cost of such an action increases,

due to the reduced punishment associated with not bringing a weapon. Another example is that

of a criminal choosing between larceny or motor vehicle theft (both non-violent crimes) and

burglary (a violent crime). Though burglary offences were considered for inclusion in the risk

assessment program, the authorities decided against it, when it was noted that burglars were

among the higher recidivists. Fraud and embezzlement is also considered a non-violent crime,

and was a crime category involved in the risk assessment program. Drugs offences were also

included in the program, provided the offenses were not serious offences and did not involve

cocaine. From here on, this policy will be known as the risk assessment policy.

The main crimes that are considered in this thesis are larceny, motor-vehicle thefts, fraud

and drugs offenses for non-violent crime, and burglary and robbery for violent offenses, though

other violent crimes will also be considered as robustness checks in our empirical strategy.

Figure 1: The yellow labels indicate the counties that had an earlier implementation of the risk assessment tool. On
December 1, 1997, Circuit 5 (the cities of Franklin and Suffolk and the counties of Southampton and Isle of Wight), Circuit 14
(Henrico), and Circuit 19 (Fairfax) became the first circuits to use the risk assessment instrument. Circuit 22 (the city of
Danville and the counties of Franklin and Pittsylvania) joined the pilot project three months later. The pilot project was
expanded to include Circuit 4 (Norfolk) and Circuit 7 (Newport News) in March of 1999.
Source: Offender Risk Assessment in Virginia: A Three Stage Evaluation
 The staggered implementation of the policy is what provides for an identification strategy,

as it allows for the implementation of a difference-in-difference approach to glean out the

response to the policy changes described above. It is important to note that the difference in

difference approach provides a suitable identification strategy only if the two groups of counties

(those with the early implementation of the risk assessment policy and those which had the

policy implemented in 2005) have similar time trends in the absence of the policy. These

assumptions hold when the original regions where the policy is implemented have been

randomly selected. According to the information provided by the legal reports on the policy, it is

claimed that counties/cities with a sufficiently large population were selected (so as to indicate

clear results in the trial run). Fairfax, Norfolk, Henrico and Newport News are four of the eight

largest judicial circuits in Virginia. These districts were also required to have more professional

judicial and policing units and have the availability of alternative punishment options. Because

there is no self-selection, but rather selection made on the part of policy makers of Virginias

judicial system, a case can be made for the pseudo-random selection of counties/cities for the

initial policy treatment. Region population and density and other observed regional variables,

such as race and wealth, can be used as proxies to control for the selection described above. A

comparison in the trends of rates of crime also provides justification for the difference in

difference implementation strategy used, with judicial districts that implement the strategy earlier

serving as the control group.

Figure 2 shows the time trend of the average rates of different crime categories for the

two groups of judicial districts. As observed, a similar trend exists for the two judicial districts

for each of the different crime categories. Generally, crime has been falling in Virginia, with

peaks occurring at or around the year 2000. This was likely a result of the early 2000s recession.
Figure 2: Average crime rates over cities, counties, towns and universities

Literature Review

Past studies seem to indicate that there is little effect of the severity of punishment on

crime. In Sentence Severity and Crime: Accepting the Null Hypothesis (2003), by Anthony

Doob and Cheryl Webster, a survey of the literature is provided, which shows that there is little

evidence to support increased severity of punishment acting as a deterrent to crime. This is

especially noted for the death penalty, which does little to deter violent crime. Based on evidence

from Ontario, Canada, Avio and Clark (1978) show that crime does respond to severity of

punishment, but found no evidence with regards to property crime, which is the main focus of

this paper (non-violent crimes are usually property crimes, and violent crimes are often crimes of

passion, perpetrated without an economic incentive). The authors claim that it is possible that

offenders do not perceive different costs in sentences of different lengths and are only concerned
with the conditional probability of being sentenced to jail. Olsen (1997) shows that earlier

studies that indicated that the severity of punishment influenced crime had large deterrence

effects because they did not control for the risk of incarceration relative to conviction. This

variable itself is likely correlated to the risk of incarceration relative to offense, not accounting

for it leads to an upward bias in results. Marginal deterrence effects are shown in this study, after

controlling for this risk. Using a difference in difference approach, rates of incarnation relative to

being caught need not be accounted for so long as they move in the same direction over time,

from one region in Virginia to another. There are few studies that look in the direction of severe

to lenient punishment regimes, as to whether crime actually increases as a result of reduced

severity of punishment, something that this study attempts to do. It is one of the few studies that

use a quasi-experimental approach to do so.

Data

Data for investigating the effects of the policy change previously described come from

two primary sources. The FBI has compiled crime statistics for every state in the country, with

further stratification at the sub-state regional level. For Virginia, these sub-regions are defined as

counties, cities, towns and Universities (entities with their own independent police force). The

advantage of this data is that it spans a longer time frame, from 1995 to 2011. The categories for

crime include murder, forcible rape, aggravated assault, robbery, burglary, motor vehicular theft,

larceny theft and arson. The second source of data is from the Virginia Police Department, and

exists for a shorter time span than the FBI police reports, from 1999-2012. This is

disadvantageous as it provides little time to capture trends in regions that had an early

implementation of the policy. However, the crime categories are more diverse, and include

crimes such as fraud and embezzlement, pornography and most importantly, drug related
offenses, which form a large chunk of criminal offences in the U.S. This study focuses on the

FBI dataset, with the Virginia dataset used primarily for robustness checks.

The risk assessment policy is implemented at the judicial circuit level. Each judicial

circuit consists of one, or multiple independent cities and counties. Administratively, cities can

be considered the equivalent of counties (each area inscribed in Figure 1 is either a county or a

city). There are a few cities that constitute a judicial circuit all on their own. Towns and

universities are located within counties or cities, and thus fall within the judicial circuit

belonging to the county or city.

Demographic information is obtained from online sources that reference the U.S. census data.

These sources include coopercenter.org, usa.org and wikipedia.org. A summary of the data from

the FBI compiled data is given below.

4
3
2
1
0

1995 2000 2005 2010

year

Murder Forcible Rape

Robbery Aggrevated Assault
Burglary Larceny Theft
Motor Vehicle Theft Arson

Table 1 & Figure 3: Average values are given for each of the crime categories, broken down into before and after the policy
change across early policy adopters (1997-1999) and late adopters (2003) as well as the entire sample. The overall trend in
crimes (normalized) is shown in the figure. There is a decreasing trend, with a spike observed during the early 2000s.

Empirical Strategy

To glean the causal effect of the severity of punishment on criminal behavior,

comparisons are made between populations that have the policy implemented and those that have

not, in a given year. This strategy is made possible because of the different times at which the
policy was implemented in different regions of Virginia. By tracking crime outcomes in a region

where the policy has changed and comparing it with a region where the policy has not changed

(either remained non-existent or remained in place) unbiased estimates of the policies effects can

be made (if the common time trend assumption hold). The basic estimating equation is:

= + + . + . +
( / ) +
Equation 1

The left hand side is a measure of crime, the number of crimes of a certain type

committed per 1000 individuals. The right hand side includes region/time specific variables

describing the specific population at a certain time, region and time dummies, and the risk

assessment dummy. The risk assessment variable identifies whether the policy has or has not

been implemented in a certain region at a given time. Along with the controls for the year and

judicial circuit, it is what allows for the difference-in-difference effect to be identified. Controls

include any regional characteristics that may influence crime, and for which there was available

data. This includes population and density, racial demographics, average age,

county/city/town/university designation and income.

The question of when the risk assessment dummy should be switched on is matter of

debate. Because the policy is enacted at different months in the year for different judicial districts

(see notes to Figure 1), the policy is specified to turn on the year after the policy

implementation.1 To measure the effects of a policy, it is critical to consider not only when the

policy officially changes, but rather when it is acclimatized to by the criminal population. For

this reason, a lag policy dummy variable is also added. The lag policy variable switches on a

year after the actual policy switches on.

1
If the policy is enacted in March 1999, the policy instrument turns on in 2000.
 Another concern is whether the policy has the same effect with the initial group of

counties that implemented the risk assessment, and the rest of the state, that implemented the

policy later, in 2003. To address this concern, the FBI data will be analyzed with two separate

policy terms, the first being defined for the early adapters (those adopting between 1997 and

1999), and the second one for the latter policy adopters (those that adopted it in 2003).

Essentially, this is like considering two separate policies being implemented. This will allow us

to consider whether there are differences between when the policy was implemented, for the

earlier adopters and the later adopters. The regression equation thus becomes:

= + + . ( )
+ . () + ( / ) +
Equation 2

Due to the panel data, care needs to be taken when making inference from the standard

errors in a difference in difference framework. Clustering the standard errors is one way of

correcting for understated standard errors that result due to serial correlation of observations

from one time period to another. As shown by Bertrand, Duflo and Mullainathan (2004) even

clustering can lead to inaccurate inferences when dealing with difference in differences. Block

bootstrapping estimation is one proposed method to overcome these problems when the number

of groups is large (the paper cites 50 states as being sufficient). With 32 judicial districts, the

number of states in our study likely qualifies for this requirement.

Analytic weights are also used in my estimation. Analytic weights (as defined by the

STATA Users Guide, Release 9, pg 284) statistically arise when running a linear regression on

underlying data that are themselves observed means. The reason for using weights in this

scenario is that when a mean is calculated from a greater number of observations, a better

estimate of the true mean is obtained. The same applies the crime data, where cities and counties
with greater populations likely have better estimates of their true crime rates, which are simply

crime occurrence divided by population. However, due to some very large populations, such as

Fairfax and Virginia, which combined account for almost 25% of the sample population,

weighted estimates may be too dependent on a few observations. One way around this limitation

is to use the logarithm of populations as weights, so as not to overly skew the estimates towards

large population observations. However, weights are not used when bootstrapping the standard

errors, as STATAs bootstrapping function did not allow for weights.

Results and Analysis:

The table below shows one set of regressions done on larceny rates for the specification defined

in Equation 1, with judicial circuits used as controls and as the block group in the bootstrapping.

Such regressions were conducted for all of the crime categories in the FBI dataset.

Table 2: Regression of equation 1 with different standard error estimations (grouping at judicial circuit level)
Table 3: Results from difference in difference estimation (FBI Police data). In the top table, regional controls and clustering is
done at the judicial circuit level. There are 31 judicial circuits, as seen in Figure 1. The bottom table runs the same regression
but with regional controls at the more local county/city level. There are a total of 133 such counties and cities.
Clustered standard errors are in parenthesis. Block bootstrapped standard errors in square brackets.
* p<0.10, ** p<0.05 (stars on standard errors, not on coefficients) AW weights = Analytic Weights

It is observed from Table 2 that population density and potentially income are determinants of

criminal activity.

The results for the two specifications for Equation 1 for all the crimes are shown in Table 3.

Analyzing Table 3 for patterns gives insights into what types of crime are affected by the policy.

Murder appears never to be affected by the policy change, no matter which specification we

look at. This makes sense, as murder is generally a crime of passion, and when it is committed

for profitable gain, the decision to commit the act is unlikely swayed by the risk assessment

policy.
Forcible rape appears to increase as a result of the policy. However, it is observed that rape is

the only crime that appears to be affected when considering the initial (non-lagged) policy

variable with grouping done at the judicial circuit level after standard error correcting with

bootstrapping. It is unlikely that any variable would be affected by the policy so strongly (a

positive effect of 0.05 incidents per 1000 people is approximately a 25% increase compared to

the 1997 average across all regions of 0.22 incidents per 1000 people). As shown in the appendix,

the occurrence of rape in Virginia across the early and late adopting judicial circuit groups do not

follow a similar trend and are in fact very erratic from year to year, unlike the rest of the crime

groups. This observation sheds doubts for the estimates obtained for rape as it is unlikely that the

common trend assumption holds in this case.

Robbery and Burglary2 are generally insignificant, with no significant effects observed after

bootstrapping the standard errors. We conclude that there is no evidence for the policy affecting

either of these types of crime. These types of crime were not targeted by the risk assessment

policy, and so we can conclude that there was no direct effect of the policy on these types of

crime. It was possible that the occurrence of these types of crimes would reduce, because they

are classified as violent crimes subject to harsher punishment that do not benefit from reduced

incarceration rates. No such secondary substitution effects are observed.

Larceny and Motor Vehicle Theft (technically also an act of larceny, though assigned to a

separate category due to its prominence), are the most likely candidates for having been effected

by the risk assessment policy. However, one must be careful not to hastily draw conclusions

from these results. Both larceny and motor vehicle theft have significant results for all

2
Robbery is the crime of taking or attempting to take something of value by force or threat of force.
Burglary involves theft on trespassing. Larceny involves theft without trespass.
specifications except when standard errors are block bootstrapped. In this case, though larceny

still has significant standard errors at the 5% significance level (for when grouping is done at the

judicial circuit level) and at 10% (for when grouping is done at the county/city level) for the

lagged policy variable. We conclude that though there is strong evidence that larceny rates have

been positively affected by the policy, the same cannot be said for motor vehicle theft.

Aggravated Assault is the most difficult of all the crime categories to explain. Positive and

significant results are observed even when bootstrapping the standard errors under the

city/county grouping specification, though only at the 10% significance level. A possible

explanation is that though the trends for the two judicial circuit groups over time are very similar,

it is an order of magnitude greater for the early adopters, as observed in Figure 2.

Econometrically, this means that when a dummy variable of 1 is assigned, for the early adopters,

and the late adopters are still assigned a 0 (for the years 2000-2003), the greater change in the

early adopter (again refer to Figure 2 where we observe a larger spike observed with the early

adopters) is what is being captured in the estimate. However, it is unlikely that this difference is

a result of the policy. Both groups respond to some change in the status quo (most likely the

early 2000 dot-com recession), but one group is simply responding to this change more

aggressively. This insight tells us to treat significant results in all other crime categories with

caution. However, as observed in Figure 2, differential changes in the other crime categories are

far less pronounced (observe Figure 2 graph for larceny), lending greater credence to the robust,

significantly positive results for larceny.

Arson is unambiguously unaffected by the policy. Arson, though technically a non-violent crime,

is not included in the risk assessment program. Arson can very well be a violent act, if intended

to cause bodily harm.

It is observed that the results are robust to adding the analytic weights. Generally, if an estimate

is significant with clustered standard errors, it is consistent after adding the weights (this

compares like estimations, as bootstrapping did not allow for weights). Generally, both the

standard error and the coefficient estimate are of a smaller magnitude; however, this is not a hard

rule. It is observed that most of the significant coefficients are with the lagged policy coefficient.

To assess the magnitude of these results, we compare the coefficients with the average values

tabulated in Table 1. It is observed that it is not only the coefficient for rape that is suspiciously

large. The significant coefficients for larceny represent an approximately 20% increase compared

to the average rate of larceny statewide in 1995. The coefficients for motor vehicle theft are even

larger, representing a 30% increase compared to average initial rates. One of the reasons for such

large coefficients is the inclusion of Universities and colleges in our sample. When these are

removed from the sample, both motor vehicle theft and larceny estimates reduce by

approximately , though remaining statistically significant. These results are shown in the

appendix, along with a table of average crime rates with and without the inclusion of universities.

The average crime rates in the rest of the state are higher for most types of crimes. This would

mean a significant reduction in the large percentile changes noted above, to a more sensible

range.

The results for the comparison between early and late adopters is compared next. In these

regressions, only the lagged policy instrument is estimated. This is because the earlier

regressions suggested that these instruments were what the crime variables of interest were more

likely to respond to. The results are shown in the Table below.
 Murder Forcible Rape Robbery Assault Burglary Larceny Vehicle Theft Arson

Standard Coefficient -0.0000189 -0.00106 0.0221 1.914 -0.224 1.828 0.367 -0.000747
(Clustered S.E.) (0.0180) (0.0568) (0.130) (1.078)* (0.497) (2.801) (0.362) (0.0394)
Early Adopters [Bootstrapped S.E.] [0.0261] [0.0668] [0.181] [1.134]* [0.511] [2.315] [0.447] [0.0499]
1997-1999 With AW weights -0.000366 -0.00689 0.0260 1.440 -0.155 1.339 0.373 0.00336
(Clustered S.E.) (0.0160) (0.0482) (0.117) (0.808)* (0.430) (2.532) (0.365) (0.0362)

Standard Coefficient 0.00876 0.0718 0.212 2.081 0.436 5.266 0.792 -0.0467
(Clustered S.E.) (0.0164) (0.0449) (0.120)* (1.049)* (0.376) (1.471)** (0.304)** (0.0727)
Late Adopters [Bootstrapped S.E.] [0.0193] [0.0515] [0.184] [1.087]* [0.568] [1.840]** [0.473]* [0.0845]
2003 With AW weights 0.00669 0.0715 0.192 1.547 0.436 4.538 0.777 -0.0329
(Clustered S.E.) (0.0147) (0.0410)* (0.119) (0.726)** (0.387) (1.333)** (0.338)** (0.0588)

Grouping (dummies and s.e. clustering) done at Judicial circuit level

Murder Forcible Rape Robbery Assault Burglary Larceny Vehicle Theft Arson

Standard Coefficient 0.00349 0.00673 0.0465 1.769 -0.127 1.965 0.395 -0.0350
(Clustered S.E.) (0.0164) (0.0541) (0.113) (0.988)* (0.464) (2.122) (0.345) (0.0584)
Early Adopters
[Bootstrapped S.E.] [0.0205] [0.0609] [0.160] [1.122] [0.295] [2.318] [0.442] [0.0548]
1997-1999 With AW weights 0.00279 0.000460 0.0475 1.336 -0.0522 1.551 0.390 -0.0207
(Clustered S.E.) (0.0147) (0.0461) (0.104) (0.768)* (0.411) (1.998) (0.347) (0.0439)

Standard Coefficient 0.00750 0.0666 0.174 1.889 0.361 4.676 0.779 -0.0920
(Clustered S.E.) (0.0154) (0.0446) (0.0882)* (1.048)* (0.391) (1.557)** (0.361)** (0.0931)
Late Adopters
[Bootstrapped S.E.] [0.0164] [0.0418] [0.110] [0.991]* [0.477] [1.463]** [0.373]** [0.0822]
2003 With AW weights 0.00606 0.0696 0.164 1.402 0.437 4.288 0.780 -0.0641
(Clustered S.E.) (0.0139) (0.0396)* (0.0916)* (0.769)* (0.380) (1.483)** (0.385)** (0.0661)

Grouping (dummies and s.e. clustering) done at City/County level

Table 4: Effects on early vs. late adopters of risk assessment policy (FBI Police data). See notes to Table 1
Clustered standard errors are in parenthesis. Block bootstrapped standard errors in square brackets.
* p<0.10, ** p<0.05 (stars on standard errors, not on coefficients) AW weights = Analytic Weights

Aggravated assault is again observed to be positive. The same reason as noted previously can

potentially explain these results. Robbery is observed to be positive for some specifications;

however, this significance breaks down with bootstrapping. Motor vehicle theft remains

significantly positive even after the bootstrap correction for the latter policy, unlike the previous

results where this significance broke down after this correction. Larceny, like motor vehicle

theft, is observed to be significant only for the latter policy. These results may suggest that

criminals were more responsive to the latter policy change than they were to the earlier policy

change. This may have been a result of the original reforms having made criminals in the later

reforming judicial circuits aware that they would be afforded greater leniency in the future and

thus better prepared to react. Such forward looking rationality may perhaps be too much to

expect of criminals, and the insignificant vs. significant results between early and late adopters
respectively may simply represent econometric/statistical issues associated with the much larger

later group of reformers compared to the reform regions in the six judicial districts that originally

piloted the study. Being a pilot study may also have resulted in this difference between the

estimates, as during this test phase compliance and implementation of the policy may not have

been perfect.

The results from regressions on the Virginia police data are shown in the table below.

Counterfeiting has a significantly negative coefficient. Though counterfeiting is a non-violent

crime, it rarely results in incarceration and thus was unlikely to be affected directly by the risk

assessment policy. Drugs and Narcotics offences that did not involve cocaine were one type of

crime that was targeted by the risk assessment policy, though no significant relationship is

observed. Addiction might prevent users from rationalizing drug use. Drug gangs may also

respond little to changes in the law. Fraud is statistically negative, but this significance vanishes

when the standard errors are bootstrapped. Motor vehicle theft has a coefficient of similar

magnitude to what was observed with the FBI data estimates though it is only significant under

the standard and weighted regressions. Though the estimates are all significant for Burglary,

they appear to cancel each other out, as the policy and lagged policy coefficients are of similar

magnitudes and act in opposite directions. It is unlikely that this is picking up the effects of the

policy. Embezzlement and Simple Assault are also insignificant. Both these are considered not-

violent crimes (FBI data reported only on the occurrence of aggravated assault). There are very

low incidence rates for embezzlement, which is why statistical inference is likely difficult.
 Counterfeiting Drugs & Narcotics Embezzlement Fraud Simple Assault Motor Vehicle Theft Burglary
Standard Coefficient 0.149 -0.0948 0.0541 -0.248* -0.960 0.0316 0.870*
(Clustered S.E.) (0.164) (0.278) (0.0722) (0.145)* (0.831) (0.181) (0.470)
Policy Bootstrapped S.E.] [0.228] [0.513] [0.0525] [0.172] [0.729] [0.267] [0.410]**
With AW weights 0.145 -0.0748 0.0398 -0.249* -0.892 -0.00601 0.812
(Clustered S.E.) (0.331) (0.290) (0.0642) (0.143) (0.807) (0.176) (0.436)*

Standard Coefficient -0.339 -0.445 -0.0653 0.0262 -0.280 0.703 -1.137**

(Clustered S.E.) (0.183)* (0.341) (0.0531) (0.105) (0.711) (0.368)* (0.457)
Policy Lag Bootstrapped S.E.] [0.142]** [0.484] [0.0725] [0.220] [0.445] [0.457] [0.612]*
With AW weights -0.331 -0.417 -0.0659 0.0245 -0.168 0.732 -1.027
(Clustered S.E.) (0.173)* (0.357) (0.0506) (0.101) (0.643) (0.382)* (0.422)**

Table 5: Results from difference in difference estimation (Virginia Police reports). See notes to Table 1.
Grouping done at judicial circuit level. Clustered standard errors in parenthesis. Block bootstrapped standard errors
in square brackets. * p<0.10, ** p<0.05 (stars on standard errors, not on coefficients)
AW weights = Analytic Weights

Discussion:

A criminal will choose to commit a crime rather than do legitimate work when:

Equation 3 ( )( ) + () > ()

The first term in this expected utility function represents the utility gained from an act of crime

that goes unpunished, whereby the second term represents the disutility from getting caught and

being punished. The parameter p represents the likelihood of getting caught. The right hand side

is simply the utility gained from honest legitimate work. Increasing or decreasing any component

on the right hand side will increase or decrease respectively the likelihood of a criminal act being

committed within a given population. This studys main goal is to empirically investigate one

aspect of this all-encompassing mathematical representation of criminal behavior. The effect of

the policy is to reduce the U(S) component in the equation for certain types of crimes. This is a

result of the policy of risk assessment which results in more lenient punishments to non-violent

criminals.

When considering results without taking into account the readjustment of the standard

errors from block bootstrapping, one may infer a response by criminals in Virginia that is mostly

consistent with this theoretical framework. From these estimates, we generally observe increases
in the rate of motor vehicular theft and larceny, two forms of non-violent crime, while observing

insignificant or ambiguous results for violent crimes such as murder, rape, burglary, robbery and

aggravated assault (the reason for the ambiguity for rape and assault have been explained in the

Results and Analysis section). As the risk assessment program primarily affected non-violent

crime, the positive results provide weak evidence that criminals did react to this policy change by

stepping up criminal activity.

To get a better understanding of the dynamics of criminal behavior in Virginia, we must

first understand how crime can potentially respond to the policy change. We will focus on crimes

of property, as these crimes are most driven by the motive of profit, and thus one can argue, they

are the most likely to be influenced by changes in how criminals are prosecuted. The crimes of

larceny and motor-vehicle theft are non-violent felonies, while the crimes of robbery and

burglary are violent offences. There are three potential outcomes, besides the null outcome of no

change in violent crime that may potentially result, given a positive change in non-violent crime,

due to the policy. The three outcomes related to a positive effect on non-violent crime are listed

in the table below.

Table 6:

What is observed is when considering the four categories of property crime specified, is a lack of

evidence for a change in the incidence of violent crime and some evidence for an increase in

non-violent crime following the policy. If these estimates are credible (in that they are attributed
to the policy), we can make important inferences about criminal behavior in Virginia. Two

scenarios are possible and are related to the intensive vs. extensive margin of criminal activity.

Firstly, it might be the case that the same criminals are not committing both violent and non-

violent crime (in this case, larceny and/or motor vehicle theft for non-violent offences and

burglary or robbery for violent offences). This inference is made because if the same group of

individuals were involved in both types of crime, one would observe a negative effect in violent

crime, if a positive effect in non-violent crime were observed. Violent criminals after all have a

limited amount of time to commit their select menu of crimes. This conclusion assumes that

there are no new entrants into the criminal enterprise and results in a specialization of criminal

activity. This corresponds to the intensive margin of criminal labor supply, as the existing pool

of non-violent criminals will have to be working (criminally) more to explain the rise in non-

violent crimes. If there are new entrants, it might be the case that though the same criminal is

committing violent and non-violent crime, the rise in non-violent crime, without a change in

violent crime is a result of these new entrants. This corresponds to an extensive margin. Given a

positive coefficient for the non-violent offences and no effect for violent offences, it is difficult

to say which one of these two arguments holds in Virginia given the data. Given the fact that the

risk assessment program was targeted at first time offenders and offenders with minor or no

criminal records, the second argument is more likely.

This study shows the importance of getting standard errors right. Many significant results

lose their significance after correcting using block bootstrapped standard errors. This is observed

in the original specification in Table 3, and again in Table 5 in the Appendix, where Universities

and Colleges have been removed from the sample (although here it is Larceny in one

specification that is seen to lose its significance). Though this casts some doubt over our results,
the positive and significant results are quite consistent across the different econometric

specifications. Out of the 6 specifications presented in Tables 3, 4 &8, larceny is only seen not to

be significantly positive in one of these cases (see Table 8). With motor vehicle theft, only under

the specifications presented in Table 3 is the coefficient not positively significant after adjusting

for bootstrapping. None of the other crime categories show such strong consistency across

econometric specifications. We thus interpret these results to mean that larceny and motor

vehicle theft do experience statistically significant positive increases in their rates of crime.

This conclusion does not mean that the policy itself was what resulted in these increases

but simply that the model, as specified yields real positive results for these types of crime.

Difference-in-difference estimates can only be trusted when the common trend assumption holds.

It is shown that with the crime of aggravated assault, this assumption likely breaks down, due to

greater response to the American economies slowdown in the early 2000s in the early adopting

judicial districts. What makes this especially a concern is the conflicting time frame of this

recession with the risk assessment policy. By graphing the U.S. GDP growth alongside the

policy dummy, Figure 4 shows how the two events coincide and what this means in our

econometric model. As shown, the policy has two on switches from where our model identifies

the difference in difference. The first occurs at the start of red box, and the second occurs at the

end of this box. By translating these points of change onto the graph of U.S. G.D.P. growth, we

note that the first switch occurs just before the recession and the second switch occurs shortly

after the end of the recession. During this time period, the U.S. unemployment rate rose from

under 4% to over 6% (Virginias rate rose from a remarkable low of 2% to just over 4%). It is

important to note that recession and unemployment in itself will not bias our estimates. However,

it is very likely that times of economic trouble leads to greater divergence in outcomes from one
geographic region to another. Even if the directional change in outcomes responds in the same

direction from one region to another, variation in the magnitude of change will confound our

results if this variation is on average different across control and treatment groups.

Figure 4: U.S. GDP growth the risk assessment policy.

Noting that three out of the six judicial districts are from the same southern coastal region of

Virginia, with a predominately naval shipbuilding economy, the average change for these

judicial districts might well be different than for the rest of Virginia. If this is the case, it might

be this that we are picking out from the difference in difference estimation.

This discussion on property crime and the recession begs the question; would we observe

the same effects had there not been a recession or had there been no policy and just the recession?

Alternatively, what part of the positive change in non-violent property crimes are attributed to

the recession and what part can be attributed to the policy change? Finally, are there interactions

between the two? It is potentially the case that criminals respond more to a reduction in the

severity of punishment during hard economic times than during good economic times. With the

limited existing data, it is difficult to say whether this occurs.

Concluding Remarks:
Though it is difficult to say with certainty that the policy resulted in increased levels of

crime, it is not possible to reject this claim either. Because of the much greater impact an

economic recession has on peoples lives, (having graduated college during a severe recession,

the author has experienced this first hand) than a policy change that affects only a portion of the

criminal population, it can be claimed with some degree of certainty that the recession had some

effect on crime, contributing to the large significant coefficients estimated with some crimes,

especially property crimes. This is not saying that the recession led to crime, but rather, because

of the D-in-D framework, it implies that certain counties were being differentially affected by the

recession compared to the rest of the state. This question provides promise for future avenues of

research. In some way regions that were selected for the trial run were different from the rest of

the state and responded differently to the recession with regards to crime outcomes.

This study presents the challenges of determining the causal impact (or lack thereof) of a

policy. Had one wanted to study this issue from the other side of the broken window (from the

perspective of researcher trying to determine the effects of a recession on crime) ones results

would now be confounded by the effects of the policy change. Nevertheless, identifying why

criminals in some regions reacted differently during this time period, be it due to the policy or

more direct economic fluctuations, will be of great value to policy makers tackling crime.
 Works Cited

Avio, Kenneth L., and C. Scott Clark. "Canadian Journal of Economics." The Supply of Property

Offences in Ontario: Evidence on the Deterrent Effect of Punishment 11.1 (1978): 1-19.

EconPapers:. Wiley. Web. 01 Aug. 2013.

Becker, Gary S. "Crime and Punishment: An Economic Approach." Journal of Political Economy

76.2 (1968): 169. Print.

Bertrand, M., E. Duflo, and S. Mullainathan. "How Much Should We Trust Differences-In-

Differences Estimates?" The Quarterly Journal of Economics 119.1 (2004): 249-75. Print.

Doob, Anthony N., and Cheryl Marie Webster. "Sentence Severity and Crime: Accepting the Null

Hypothesis." Crime and Punishment 30 (2003): 143-95. JSTOR. The University of Chicago

Press. Web. 01 Aug. 2013.

Ostrom, Brian J. Offender Risk Assessment in Virginia: A Three-stage Evaluation : Process of

Sentencing Reform, Empirical Study of Diversion and Recidivism, Benefit-cost Analysis.

[Williamsburg, Va.]: National Center for State Courts, 2002. Print.

Stata User's Guide: Release 9. College Station, TX: Stata, 2005. 284. Print.
Appendix:

Figure 5: Average crime rates over cities, counties, towns and universities

Table 7: Average Crime in Colleges and the rest of the state

 Murder Forcible Rape Robbery Assault Burglary Larceny Vehicle Theft Arson

Standard Coefficient 0.0111 0.109 0.124 0.0660 0.640 1.391 0.246 -0.0259
(Clustered S.E.) (0.0102) (0.0186)** (0.0733) (0.193) (0.268)** (1.087) (0.199) (0.0316)
Policy [Bootstrapped S.E.] [0.0119] [0.0281]** [0.0925] [0.240] [0.370]* [1.152] [0.422] [0.0317]
With AW weights 0.00932 0.100 0.0976 0.0514 0.582 0.975 0.237 -0.0252
(Clustered S.E.) (0.00949) (0.0182)** (0.0713) (0.195) (0.261)** (1.042) (0.214) (0.0288)

Standard Coefficient -0.0155 -0.0488 -0.0277 0.236 -0.266 1.691 0.394 0.0278
(Clustered S.E.) (0.00999) (0.0250)* (0.0894) (0.232) (0.210) (1.384) (0.122)** (0.0317)
Policy Lag [Bootstrapped S.E.] [0.0126] [0.0244]** [0.141] [0.292] [0.278] [1.169] [0.203]** [0.0523]
With AW weights -0.0148 -0.0462 -0.0341 0.201 -0.280 1.506 0.370 0.0234
(Clustered S.E.) (0.00958) (0.0225)** (0.0853) (0.224) (0.187) (1.294) (0.131)** (0.0324)

Grouping (dummies and s.e. clustering) done at Judicial circuit level

Murder Forcible Rape Robbery Assault Burglary Larceny Vehicle Theft Arson

Standard Coefficient 0.00759 0.0936 0.0536 -0.0461 0.433 0.683 0.160 -0.0340
(Clustered S.E.) (0.00775) (0.0313)** (0.0742) (0.213) (0.333) (1.004) (0.223) (0.0295)
Policy [Bootstrapped S.E.] [0.0114] [0.0212]** [0.0573] [0.207] [0.247]* [0.951] [0.274] [0.0298]
With AW weights 0.00700 0.0885 0.0414 -0.0446 0.437 0.492 0.173 -0.0301
(Clustered S.E.) (0.00744) (0.0300)** (0.0727) (0.214) (0.318) (0.922) (0.233) (0.0266)

Standard Coefficient -0.0141 -0.0357 -0.00380 0.221 -0.0746 2.194 0.432 0.0143
(Clustered S.E.) (0.00861) (0.0270) (0.0858) (0.239) (0.222) (0.847)** (0.156)** (0.0281)
Policy Lag [Bootstrapped S.E.] [0.0122] [0.0132]** [0.0958] [0.268] [0.192] [0.730]** [0.136]** [0.0285]
With AW weights -0.0135 -0.0355 -0.0154 0.180 -0.105 1.951 0.402 0.0110
(Clustered S.E.) (0.00851) (0.0261) (0.0845) (0.230) (0.212) (0.794)** (0.157)** (0.0286)

Grouping (dummies and s.e. clustering) done at City/County level

Table 8: Same regression as Table 1, but omitting Universities and Colleges (FBI Police data). See notes to Table 1.
Clustered standard errors in parenthesis. Block bootstrapped standard errors in square brackets.
* p<0.10, ** p<0.05 (stars on standard errors, not on coefficients) AW weights = Analytic Weights