Functional Substitution among Crimes: Some Evidence

Since Becker's 1968 paper on the economic model of criminal behavior, there has been a lot of empirical work to test the deterrence hypothesis [1, 3, 5, 15, 17]. These studies have looked at how punishment (certainty and severity) deters crime, and have concluded that deterrence works. However, these studies have looked at the supply of one type of crime in isolation without paying attention to the criminal's choices among crime types. Given that criminals seek to maximize the net returns to their activities, they are likely to respond in one of three possible ways to a relative decline in the net returns to a particular criminal activity. They would either withdraw completely from criminal activity, substitute one type of criminal activity for the one with decreased relative returns, or move to another jurisdiction where net returns to criminal activities are higher. The movement from one jurisdiction to another in response to decreased returns to crime is described as spatial substitution of crime or the spillover effects while substitution among crime types is known as functional substitution. Withdrawal from criminal activity or the reduction of criminal activity in response to increased cost to the criminal is known as the deterrent effect. Spillover effects have been investigated by Hakim et al. (1979) and Hakim and Regent (1981), among others. Though spatial substitution of crime is of interest in its own right, especially its policy implication for collaboration of law enforcement agencies for crime prevention, it is not the focus of this study. The deterrence hypothesis has been extensively investigated by other researchers. In this study, we concern ourselves with the functional substitution among crimes. The probable shift from one type of crime to another implies that though a deterrent policy that focuses on one type of crime may lead to a decrease in that particular crime type, such a policy may not have any effect on the overall crime rate because criminals may substitute one crime type for another. Such a change in the probability and severity of punishment associated with a particular crime type may only change the composition of crimes but not the total volume of crime. Though there have been studies of spatial displacement of crime [9, 10, 11], as well as of the deterrence hypothesis [1, 2, 3, 4, 5, 6, 15, 16], there have been very few studies of the functional substitution among crime types. Yet studies of functional substitution among crime types could have interesting policy implications for crime prevention. For example, if all property crimes are found to be complements, then law enforcement agencies could concentrate on preventing a few types of property crimes instead of spreading their resources thinly over all property crime types. The few studies of functional substitution among crime types have produced mixed results. Heineke (1978), using a translog utility function and data for SMSAs in the US from 1967 to 1972, finds no substitution among property crimes even though he finds a strong substitution between crime and legal activities. Witte and Schmidt (1984) find evidence of functional substitution of crime among recidivists in North Carolina. However, their sample may be a biased sample since the study considered only persons with a criminal history. It is therefore difficult to make any inference about the general population from their results. Hakim, Spiegel and Weinblatt (1984), using data from New Jersey, find that robbery, burglary and larceny are substitutes while auto theft is complementary to burglary and larceny though not to robbery. In addition to measuring functional substitution, Hakim, Spiegel and Weinblatt also estimated the effects of city size on the crime rate and found it to be significant. They use the arrest rate as the only