Deterred or Detained? A Unified Model of Criminal Punishment

The standard economic model of crime since Becker (1968) is primarily concerned with deterrence. Actual punishment policies, however, appear to rely on imprisonment to a greater extent than is prescribed by that model. One reason may be the incapacitation function of prison. The model developed in this paper seeks to incorporate incapacitation into the standard model. A key finding of the hybrid model is that when prison is the only form of punishment and the probability of apprehension is fixed, incapacitation can result in a longer or a shorter optimal prison term compared to the deterrence-only model. It is longer if there is underdeterrence, and shorter if there is overdeterrence. When fines are also available and are not constrained by offenders' wealth, the optimal prison term is zero. Since the fine achieves first-best deterrence, only efficient crimes are committed, and hence, there is no gain from incapacitation. Other aspects of the standard model are also studied within the context of the hybrid model.