Economics of Capital Punishment

Capital Punishment and the Death Penalty (the former stands for the execution of the latter) is a heated and emotional topic, perfect for some good old cost-benefit analysis. I will start with the possible benefits and the evidence for it. This includes the decreased cost of further incarceration and possible deterrence effects. Next up are the costs of capital punishment. Here the cost of taking a life, the cost of getting it wrong, the cost of a stringent trial, and the incentives of not getting caught will be discussed. This discussion is especially hard for me because two economic heroes of mine are on opposing sides. Gary S. Becker, a pioneer of the economics of crime and father of rational crime, is pro-death penalty. On the other hand, Steven D. Levitt, revolutionizing econometric work on crime via variables of abortion and imprisonment statistics, is not in favor of the death penalty. As they are good economists, they both have their data and analysis to back up their claims. So let’s see who’s right.

The benefit of Capital Punishment:

A minor benefit of executing a convicted murderer is the abrupt ending of costs of this individual to state and others. Imprisonment costs and possible harm to other inmates are ruled out in the future. His death will spare the state and the prison system costs. These might be outweighed by the huge legal proceedings of a capital punishment trial (this will be discussed in the costs section).

The strongest argument for capital punishment is the deterrence effect. A pioneering study of Ehrlich (1973) found that about 7 homicides are deterred by every capital punishment. The intuition is that this precedent will deter some criminals from pulling the trigger. Follow-up studies by Hashem Dezhbakhsh, Paul H. Rubin, Joanna M. Shepherd (2003) showed a even high prevention of 18 murders for every capital punishment. There is a high degree of econometric dispute about those findings, and some studies finding no significant effect of capital punishment on murder (Avio, 1979, 1988; Bailey, 1982; Cheatwood, 1993; Forst, Filatov, and Klein, 1978; Grogger, 1990; Leamer, 1983; Passell and Taylor, 1977). An interesting study by Levitt and Katz (2003) controlled for deaths in prison and found that this is a stronger deterrent for crimes than the capital punishment. This topic is an econometric nightmare since the data is all over the place. Only 1885 capital punishments were executed between 1946 and 1997, this being a less than 1% chance of being executed for committing murder in capital punishment states. This means only a tiny fraction of death penalties are actually executed making it very hard to measure the effect of the death penalty. The data on whether the capital punishment deters murder is inconclusive. Further discussion of what this might imply will be given in the conclusion.

The costs of capital punishment.

First of all, there is a substantial cost to putting an end to a life. Family, friends, and employers of that individual will incur emotional and pecuniary costs. The individual himself will most probably have his life altered for the worse by having a death sentence lingering over his head. These costs must be considered when debating capital punishment.

A huge cost would occur when getting it wrong; convicting an innocent individual. The credibility of the judiciary and the irreversible nature of this punishment would see a huge cost to state and social cohesion. Thus, the probability of getting it wrong must be at a minimum.

Minimizing the false positives implies maximizing costs of legal inquiry. Death row and state-supported appeals, more often than not, last decades and cost a fortune for state and judiciary. This cost far outweighs the previously mentioned benefit of capital punishment induced stopping of imprisonment. This means that the legal costs of death row are way higher than leaving a person in prison for the rest of his life.

The most interesting cost of capital punishment links to the benefits of deterrence. If we assume that the capital punishment deters murder, it must also deter getting caught after committing murder. This means that increasing the severity of punishment will lead to murderers less willing to admit to a crime. In the worst cases, murderers will try to avoid facing the police at any cost. These costs might be committing more crime and even murder in order to hide or escape. Thus, capital punishment does not only deter others from murdering, but it also deters murderers from getting caught, implying more crime by murders.

Implications of Cost-Benefit Analysis:

Let’s assume that the data on the deterrence effect is conclusive and the best estimates show 3 murders prevented by 1 execution. I think this would speak in favor of capital punishment since we end 1 criminal’s life in order to save 3 innocent lives. What if the deterrence effect was 1 life saved. I’d still be in favor, I think. What about 0.5 lives saved. Now it gets complicated. I think anything below 1 would be more difficult to argue. With better econometric models we might get to more conclusive answers, in which case will have to face up to this question.

If we accept the deterrence for murder, what about the deterrence of other crimes like violent rape? I think there is an argument that capital punishment might just be another way to decrease crime. If so, shouldn’t we use it?

Lastly, If we think that capital punishment has a deterrent effect, shouldn’t we make this as public as possible. In my mind, deterrence is the only true benefit of capital punishment. I do not care much for revenge thoughts since I believe that a person committing murder, as shown countless times, had a horrible life of his own, or, in some cases, exhibits mental and neurological disorders. What capital punishment would do, is to deter other people, rather than punish an individual. To get the most out of this would a public execution or municipal mutilation of the body post-mortem be the most effective way to deter other people from committing capital crimes?

In Conclusion, I think the implications above are theoretical only because it seems that modern econometric time series analysis supports that there is a very small and insignificant effect of deterrence. In general, I wanted to present a non-emotional cost-benefit analysis of this heated topic of capital punishment. A great discussion is presented in “Uncommon Sense”, where legal scholar Richard Posner and economist Gary Becker talk through this issue. Related blog posts to economics and the value of life are Economics of Kidnap and Ransom and Corona and the Value of Life