Podcast
Questions and Answers
What happens to the stigma associated with an action if one extra person engages in that action?
What happens to the stigma associated with an action if one extra person engages in that action?
- The stigma associated with the action increases.
- The stigma becomes irrelevant.
- The stigma associated with the action falls. (correct)
- The stigma does not change.
What is the impact of having an extra free-rider in relation to expected stigma?
What is the impact of having an extra free-rider in relation to expected stigma?
- Expected stigma remains constant regardless of participation.
- Expected stigma decreases leading to unravelling of participation. (correct)
- Expected stigma increases leading to more participants joining.
- Expected stigma fluctuates without influencing participation.
How can the stigma effect influence crime rates?
How can the stigma effect influence crime rates?
- It has no impact on crime behavior.
- It can either decrease crime or incentivize it, depending on social norms. (correct)
- It only increases the likelihood of crime among communities.
- It solely encourages adherence to social norms against crime.
What is suggested about the stability of the point associated with income and indifference?
What is suggested about the stability of the point associated with income and indifference?
What likely happens when an individual who does not engage in crime is part of a group where crime has a positive stigma?
What likely happens when an individual who does not engage in crime is part of a group where crime has a positive stigma?
What is one strategy mentioned for reducing crime?
What is one strategy mentioned for reducing crime?
What type of data is ideal for testing the rational choice model?
What type of data is ideal for testing the rational choice model?
How does the model suggest crime is committed?
How does the model suggest crime is committed?
What approach is commonly used for testing the rational choice model in macrodata?
What approach is commonly used for testing the rational choice model in macrodata?
What does behavioural economics reject about economic agents?
What does behavioural economics reject about economic agents?
What may need to be done when models are not supported by data?
What may need to be done when models are not supported by data?
Which aspect is NOT considered a factor in the decision-making model related to crime?
Which aspect is NOT considered a factor in the decision-making model related to crime?
What is a potential problem highlighted in collecting microeconomic data for the rational choice model?
What is a potential problem highlighted in collecting microeconomic data for the rational choice model?
What is the primary assumption about individuals in Becker's model of crime?
What is the primary assumption about individuals in Becker's model of crime?
In expected utility theory, what does the term 'payoff' refer to?
In expected utility theory, what does the term 'payoff' refer to?
What must occur for an individual to choose to commit a crime according to the model?
What must occur for an individual to choose to commit a crime according to the model?
What role does probability play in the decision-making process described by Becker?
What role does probability play in the decision-making process described by Becker?
What does the expected utility associated with committing a crime depend on?
What does the expected utility associated with committing a crime depend on?
What is the 'utility gain from crime' referring to in the context of Becker’s model?
What is the 'utility gain from crime' referring to in the context of Becker’s model?
Which outcome occurs with probability (1-p) when committing a crime?
Which outcome occurs with probability (1-p) when committing a crime?
What is one of the main considerations in expected utility theory when analyzing uncertain decisions?
What is one of the main considerations in expected utility theory when analyzing uncertain decisions?
What is the relationship between the probability of getting away with a crime and the likelihood of committing it?
What is the relationship between the probability of getting away with a crime and the likelihood of committing it?
How does wealth affect the probability of committing a crime if marginal utility is constant?
How does wealth affect the probability of committing a crime if marginal utility is constant?
What can be concluded about risk averse individuals in relation to committing crimes?
What can be concluded about risk averse individuals in relation to committing crimes?
What is a hassle in the context of decision-making?
What is a hassle in the context of decision-making?
What needs to be true for crime to be committed based on the expected gain?
What needs to be true for crime to be committed based on the expected gain?
Why might a student choose not to apply for a bursary even when there is a potential reward?
Why might a student choose not to apply for a bursary even when there is a potential reward?
If marginal utility is falling, how are risk averse individuals likely to behave regarding crime?
If marginal utility is falling, how are risk averse individuals likely to behave regarding crime?
Which of the following correctly reflects the impact of increasing fines on crime probability?
Which of the following correctly reflects the impact of increasing fines on crime probability?
In the context of the hassle model, what does 'p' represent?
In the context of the hassle model, what does 'p' represent?
What is indicated if the first term in analyzing crime gain is negative?
What is indicated if the first term in analyzing crime gain is negative?
How does uncertainty affect a student’s willingness to claim a refund?
How does uncertainty affect a student’s willingness to claim a refund?
What is the condition for a student to decide to apply for a bursary based on the hassle model?
What is the condition for a student to decide to apply for a bursary based on the hassle model?
How does the combination of marginal utilities compare to given marginal utility when considering wealth's impact on crime?
How does the combination of marginal utilities compare to given marginal utility when considering wealth's impact on crime?
What might influence the level of hassle experienced by different students?
What might influence the level of hassle experienced by different students?
What psychological factor is linked to the hesitation in making claims?
What psychological factor is linked to the hesitation in making claims?
What type of utility loss is involved in applying for a bursary?
What type of utility loss is involved in applying for a bursary?
What happens when the subjective probability of success increases with income?
What happens when the subjective probability of success increases with income?
In the stigma model, what occurs if a large number of individuals are claiming benefits?
In the stigma model, what occurs if a large number of individuals are claiming benefits?
What determines the decision to join a union versus free-riding according to the provided model?
What determines the decision to join a union versus free-riding according to the provided model?
In case (i), when benefits are increasing and costs are falling, what is the expected outcome?
In case (i), when benefits are increasing and costs are falling, what is the expected outcome?
According to the stigma model, what is an example of a decision influenced by stigma?
According to the stigma model, what is an example of a decision influenced by stigma?
What factor could result in more applications from lower income backgrounds?
What factor could result in more applications from lower income backgrounds?
In complex cases of benefits, when benefits increase first and then decrease while costs increase, what is likely?
In complex cases of benefits, when benefits increase first and then decrease while costs increase, what is likely?
What might signify an individual being indifferent between free riding and union membership?
What might signify an individual being indifferent between free riding and union membership?
Flashcards
Economic Model
Economic Model
A mathematical representation of a decision-making process, typically involving individuals choosing actions to maximize their utility.
Objective Function
Objective Function
A function representing the value or satisfaction an individual derives from a particular outcome.
Decision Under Certainty
Decision Under Certainty
The situation where the individual knows with certainty what the outcome of each action will be.
Decision Under Uncertainty
Decision Under Uncertainty
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Expected Utility Theory (EUT)
Expected Utility Theory (EUT)
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Expected Utility
Expected Utility
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Payoff from Crime
Payoff from Crime
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Condition for Committing a Crime
Condition for Committing a Crime
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How to reduce crime using the rational choice model
How to reduce crime using the rational choice model
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What does "Gain from crime" represent?
What does "Gain from crime" represent?
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What kind of microeconomic data is ideal for testing the rational choice model?
What kind of microeconomic data is ideal for testing the rational choice model?
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How is macrodata used to test the rational choice model?
How is macrodata used to test the rational choice model?
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What is the core principle behind the rational choice model?
What is the core principle behind the rational choice model?
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What is utility maximization in the context of crime?
What is utility maximization in the context of crime?
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How does the rational choice model incorporate societal impacts?
How does the rational choice model incorporate societal impacts?
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How does economics adapt to new evidence?
How does economics adapt to new evidence?
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Comparative statics
Comparative statics
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Probability of getting away with the crime & gain
Probability of getting away with the crime & gain
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Impact of fine on crime
Impact of fine on crime
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Wealth and crime - constant marginal utility
Wealth and crime - constant marginal utility
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Wealth and crime - risk aversion
Wealth and crime - risk aversion
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Expected gain vs. expected fine
Expected gain vs. expected fine
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Risk aversion and crime deterrence
Risk aversion and crime deterrence
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Risk aversion and diminishing marginal utility
Risk aversion and diminishing marginal utility
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Hassle
Hassle
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Hassle (in decision making)
Hassle (in decision making)
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Indifference Point (in decision making)
Indifference Point (in decision making)
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Hassle cost
Hassle cost
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Stigma model
Stigma model
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Expected Utility of Free Rider
Expected Utility of Free Rider
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Indifference Point
Indifference Point
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Condition for Joining a Union
Condition for Joining a Union
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Effect of Benefit on Application
Effect of Benefit on Application
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Free Rider Problem
Free Rider Problem
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Joining Cost
Joining Cost
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Stigma Reduction
Stigma Reduction
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Stigma Increase
Stigma Increase
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Stigma Feedback Loop
Stigma Feedback Loop
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Peer Effect on Crime
Peer Effect on Crime
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Stigma Effect on Crime
Stigma Effect on Crime
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Study Notes
Modelling Economic Decisions
- Economic models are constructed using skills in identifying objectives and mathematically maximizing or minimizing the objective function.
- First-order conditions may need to be solved to determine if the solution is a maximum.
- Decisions can be made under conditions of certainty or uncertainty.
- Expected utility theory can be used to analyze uncertain decisions.
EUT: Background
- Expected utility theory can be applied to understand various decision scenarios, such as marriage, divorce, and suicide.
Becker's Model of Crime
- Becker's model of crime utilizes the expected utility framework.
- It's a more comprehensive model than a basic representation of crime.
- Links to relevant article are cited.
A Model of Crime
- Models assume that all individuals have the potential to commit crime.
- Individuals are expected utility maximizers.
- Actions are taken to maximize their expected utility.
- Actions have associated payoffs which can be certain or uncertain.
Crime
- Committing a crime results in a payoff (B) with a probability (p).
- Unsuccessful crime results in a fine (F) with a probability of (1-p).
- Uncertainty can exist regarding aspects of the decision.
- Probabilities of certain events may be subjective and not objective.
Expected Utility Associated with Crime
- The expected utility associated with committing a crime is calculated based on assumptions of expected utility theory.
- The utility of not committing a crime is a certain utility.
Commit a Crime?
- The condition for committing a crime is that the utility gain from committing the crime exceeds the certain utility.
- Models refer to the described condition as the rational theory of crime.
Comparative Statics
- Partial derivatives of the gain function with respect to arguments like payoff and probability of not being caught are used to analyze changes.
- Changes in factors like the fine can reduce the probability of committing a crime.
- When analyzing changes from the crime gain function. the payoff/probability components are analyzed.
Wealth
- It is more complex to determine how wealth affects the utility gain from crime.
- The effect can be determined using a linear combination of marginal utilities.
- In some cases, wealth does not impact the probability of crime.
Risk Aversion
- If marginal utility is falling, there is risk aversion.
- Risk aversion is equivalent to a declining marginal utility.
- The first part of the term in the equation is likely negative, as expected monetary gain from crime is above wealth.
- The second part of the term is positive and associated with risk averse behaviour.
Another Way to Look at This
- The gain from committing a crime is calculated.
- The condition for committing a crime is that the gain is positive.
- Rearranging the equation to calculate the gain.
Testing the Model
- Empirical testing requires microeconomic data.
- Ideally, data should be collected before and after the crime.
- Macrodata provide a common approach with support for the Becker Model.
- Data sets such as the National Child development Survey are referenced.
Extending the Model
- The model can be applied to different types of crime beyond monetary gains and losses.
- The decision to commit a crime depends on the moment-by-moment maximum utility.
- Utility is not limited to a materialist evaluation.
Economics as a 'Magpie' Science
- Economics progresses through a continuous process of model building and testing.
- Incorrect models need alteration or replacement.
- Economists draw ideas from other fields like Psychology and Sociology.
Behavioural Economics
- Behavioural economics rejects the simplistic assumption that economic agents act independently.
- This assumes interdependence.
- Incorporates hassle and stigma factors into models.
Hassle Model
- Hassle is the cost associated with performing an action, often non-monetary.
- Consider an example of deciding to complete a form to get a refund.
- Utility gain from the refund may be less than the perceived hassle of completing the form
Uncertainty Aversion
- Uncertainty aversion occurs due to uncertain outcomes, like an unknown refund amount.
- Subjective beliefs impact the perceived value of uncertain items.
- Uncertainty reduces the value of future gain.
Model (Bursary Application)
- Students consider whether to apply for a bursary.
- Success probability is "p."
- Unsuccess will be (1-p)
- Applying for a bursary results in a gain.
- The application generates hardship (hassle), regardless of success.
- A student will apply if the benefit expected from the application outweighs the hassle.
Stigma Model (Union Membership)
- Stigma represents an additional cost of an action.
- Factors similar to those in a hassle model are considered.
- The stigma effect is endogenous, related to the actions of others.
Model (Free Riding)
- Income affects utility (u(x))..
- Individuals gain some benefit from a relevant action (B).
- There is a probability of being identified for an action (q).
- A free rider incurs a stigma cost.
- Free riding utility is compared to the non-union wage (U(x)).
Revisiting Crime
- Peer effects are a significant factor in crime.
- Peer effects are investigated theoretically
Adding Stigma to the Crime Model
- The gain from crime includes a potential stigma cost.
- The stigma effect depends on social norms.
- Negative stigma (breaking a social norm) tends to increase the likelihood of crime
- Positive stigma tends to discourage crime.
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Description
Explore the intricate relationship between stigma and crime in this quiz. Delve into how the presence of an additional person engaging in an action can alter the stigma associated with it, and examine the implications for crime rates and group dynamics. Test your understanding of these sociological concepts and their impact on individual behavior.