CRIME, PUNISHMENT, AND SOCIAL EXPENDITURE

Criminal activity can be controlled by punishment, and by social expen diture on both enforcement and redistributive transfers that increase the opportunity cost of imprisonment. Individuals may differ in the co mbinations of these policies that they prefer. We study the dependence of these preferences on the individuals' characteristics and the natu re of the crime under consideration. A political mechanism determines the policy adopted by society. Differences in the policies adopted acr oss societies are explained by the nature of the political mechanism a nd the initial distribution and level of incomes.