Intertemporal preferences in criminal decision making

Rasmusen (1996) presents a model in which employers offer criminals a lower wage compared to non-criminals because a conviction serves a signal of low productivity. In this paper, I propose an extension to the model that endogenizes the decision to become a criminal using intertemporal discounting. The aim is to get a better understanding of criminal decision making, as well as of the consequences of stigmatization. The analysis reveals that less productive individuals, indeed, become criminals. The wage of unconvicted individuals can either rise or fall as a consequence of an increase in criminality. Additionally, wage discrimination based on a conviction has a deterrent effect on crime. However, it has the potential to promote repeat offending. This observation creates the need for a well-balanced policy with respect to the public availability of criminal records and punishment of repeat offenders.