Essays on the economics of law, crime and discrimination

Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 2006.Includes bibliographical references.This dissertation presents work empirically investigating various aspects of the criminal justice system. Chapter one, coauthored with Chris Rohlfs, examines the judicial bail-setting process and the defendant decision to pay bail. Optimal bail-setting rules must balance the tradeoffs between costs to defendants and costs to society. This chapter develops a model of optimal bail that incorporates the cost of jailing the defendant, the private cost to the defendant from being incarcerated, the cost of crime, and the costs that arise when defendants abscond. The model is empirically calibrated using data from a randomized experiment. The randomized experiment allows the use of defendants' bail posting decisions to estimate their subjective values of freedom. Our estimates suggest that high-risk defendants would be willing to pay $300 to $1,000 for 90 days of freedom. We find the socially optimal level of bail to be substantially lower than levels currently set by judges. Aggregating nationally, we find that the total social benefit of reform would be on the order of $10 billion per year. Chapter two, coauthored with Marianne Bertrand and Sendhil Mullainathan, is a study of the impact of defendant race on interjudge sentencing disparity, which seeks to add to the knowledge of the role of race in the courtroom.(cont.) This chapter attempts to determine whether the legal system discriminates against minorities by addressing a related question: do judges differ in how they sentence minorities? This approach avoids the difficulty of systematic racial differences in case characteristics by exploiting the random assignment of cases to judges. We measure the between judge variation in the ratio of African-American to White defendant sentence lengths and incarceration rates. In our data set, which includes all felony cases in Cook County, Illinois from 1985-2005, we find large between-judge variation. We also find that judge characteristics, such as age, and the judge's previous work experience as a prosecutor or defender all predict their racial gap in sentencing. Chapter three presents evidence regarding the deterrent effect of incarceration. Knowing the magnitude of the deterrent effect of incarceration on crime is crucial to optimal policy setting. In this chapter I make use of sentence enhancements in gun robbery sentence lengths caused by add-on gun laws to attempt to estimate this impact. Since defendants subject to add-ons would be incarcerated in the absence of the law change, the short-term effect will be solely deterrent.(cont.) I take advantage of the temporal variation in the passage of these laws in different states to identify the causal impact of the law change. I find that add-on gun laws result in a significant reduction in gun robberies, approximately 5% within the first three years of passage, for the average add-on gun law. The results are robust to a number of tests, and do not appear to be due to a large spillover to other types of crime.by David S. Abrams.Ph.D