IDADE DE SÃO SÃO PAULO UNIVERSI ENTIA VINCES Universidade de São Paulo Biblioteca Digital da Produção Intelectual - BDPI Departamento de Economia - FEARP/REC SIB? SISTEMA INTEGRADO DE BIBLIOTECAS UNIVERSIDADE DE SÃO PAULO Artigos e Materiais de Revistas CientÃficas - FEARP/REC 2009 Income inequality and pecuniary crimes ECONOMICS LETTERS, v.104, n.1, p.40-42, 2009 http://producao.usp.br/handle/BDPI/20563 Downloaded from: Biblioteca Digital da Produção Intelectual - BDPI, Universidade de São Paulo
Economics Letters 104 (2009) 40-42 economics letters ELSEVIER Contents lists available at ScienceDirect Economics Letters journal homepage: www.elsevier.com/locate/ecolet Income inequality and pecuniary crimes Luiz Guilherme Scorzafave *,1, Milena Karla Soares School of Economics, Business and Accounting of Ribeirão Preto-University of São Paulo (FEA-RP/USP), Brazil ARTICLE INFO ABSTRACT Article history: Received 22 October 2007 Received in revised form 17 March 2009 Accepted 26 March 2009 Available online 2 April 2009 This paper verifies the relationship between income inequality and pecuniary crimes. The elasticity of pecuniary crimes relative to inequality is 1.46, corroborating previous literature. Other factors important to decrease criminality are expanding job opportunities and a more efficient legal system. C 2009 Elsevier B.V. All rights reserved. Keywords: Inequality Criminality Pecuniary crime Brazil JEL classification: D3 D6 K4 1. Introduction The debate concerning the relationship between high income inequality and high criminality is growing in many countries, where these two phenomena have ways been present. According to Becker (1968), income inequality can be a proxy for the disparity between ill- gotten and legal gains. So, we expect inequality to be positively related to crime rates, particularly of those crimes involving pecuniary gains. In this paper we expand the definition of pecuniary crime to include drug trafficking, while previous papers in the literature only deal with property crimes2. As a unit of analysis, we use the municipalities3 in São Paulo State, Brazil, and as the dependent variable we work with the average pecuniary crime rate per 100,000 inhabitants between 2002 and 2004. In order to avoid potential endogeneity, lagged independent variables are used. The literature about criminality points to the fact that criminal behavior is the result of the interaction of three factors: a) moral cost; * Corresponding author. Avenida dos Bandeirantes, 3900-FEARP, 14040-900-Ribeirão Preto, SP, Brazil. Tel .: +55 16 3602 4752; fax: +55 16 3633 4488. E-mail address: scorza@usp.br (L.G. Scorzafave). 1 The authors thank Walter Belluzzo Junior, Alexandre Sartoris and Danilo Igliori for helping with spatial data and the participants at seminar at FEA-RP/USP and an anonymous referee for helpful comments. 2 A few examples of property crimes are hijacking, shoplifting, fraud, burglary and robbery. 3 The local political division in Brazil is the municipality, which is roughly equivalent to a county, but is governed by a single mayor and a municipal council. b) law enforcement and police efficiency; and c) economic incentives individuals face. Moral cost is related to the psychological punishment - like guilt and remorse - that individuals attribute to themselves. The influence of economic incentives mainly affects crimes with pecuniary gains, where individuals balance the income they could