Economics behind Black Markets

Sorry this post is so long: but the following was the reading list for Steven Levitt's class at UofC - Economics of Crime. Isn't entirely focuses on "black market", but there is plenty of reading about the economics of drug trade, prostitution, gambling below. Almost all readings below are freely accessible in pdf form on google.

Readings: **Levitt, Steven, “Understanding Why Crime Fell in the 1990s: Four Factors That Explain the Decline and Six That Do Not,”Journal of Economic Perspectives v18, n1 (Winter 2004): 163-90

Sourcebook of Criminal Justice Statistics (leaf through it, don’t read it!!) Freeman, Richard, “Economics of Crime” Unpublished manuscript.

Walinsky, Adam “The Crisis of Public Order,” Atlantic Monthly, vol. 276, July 1995, pp. 39-54. (This article is totally wrong…I want you to read it with that in mind)

Non-economic theories of criminal behavior

Readings: **Hirschi, Travis, Causes of Delinquency, chapter 1.

Sampson, Robert and John Laub, Crime in the Making, Chapter 9.

The basic principles of economics (aka what you should have learned in econ 200 and econ 201, but may have been too busy solving Lagrangians to notice)

Economic approaches to understanding crime

Readings: **Becker, Gary “Crime and Punishment: An Economic Approach,” Journal of Political Economy, vol. 76, 1968, pp. 169-217.

DiIulio, John “Help Wanted: Economists, Crime, and Public Policy,” Journal of Economic Perspectives, vol. 10, 1996, pp. 1-23.

Becker, Gary, The Economic Approach to Human Behavior, chapter 1.

ALSO: A review of statistics and econometrics

Extensions/tests of the economic model of crime

Readings: ** Kessler, Daniel and Steven Levitt, “Using Sentence Enhancements to Distinguish between Deterrence and Incapacitation.” Journal of Law and Economics 42 (April 1999): 343 63.

**Levitt, Steven, “Why Do Increased Arrest Rates Appear to Reduce Crime: Deterrence, Incapacitation, or Measurement Error?” Economic Inquiry, vol. 36, 1998, pp. 353-372.

Ayres, Ian, and Steven Levitt, "Measuring the Positive Externalities

from Unobservable Victim Precaution: An Empirical Analysis of Lojack," Quarterly Journal of Economics, 113(1), (February 1998), pp. 43–77

Agan, Amanda, “Sex Offender Registries: Fear without Function?” Journal of Law and Economics, February 2011

Correlation vs. causality

Readings: **Edward Leamer, "Let's Take the Con out of Econometrics," American Economic Review, March 1983, vol. 73, no. 1, pp. 31 43.

Fischer Black. "The Trouble with Econometric Models," Financial Analysts Journal, March-April 1982, pp. 29-37.

THE CRIMINAL JUSTICE SYSTEM

Police

Readings: **Levitt, Steven, “Using Electoral Cycles in Police Hiring to Estimate the Effect of Police on Crime,” American Economic Review, vol. 87, June 1997, pp. 270-290.

**Wilson, James Q. and George Kelling, “Broken Windows,” Atlantic Monthly, March 1982.

**Keizer, Kess, Siegwart Lindenberg, and Linda Steg, “The Spreading of Disorder,” Science Nov 20, 2008.

DiTella, Raphael and Ernesto Schargrodsky, 2004, “Do Police Reduce Crime? Estimates using the Allocation of Police Forces after a Terrorist Attack,” American Economic Review 94(1): 115-133.

Prisons

Readings: **DiIulio, John and Anne Piehl, “Does Prison Pay? The Stormy National Debate over the Cost-Effectiveness of Imprisonment,” The Brookings Review, Fall 1991, pp. 28-35.

**Drago, Francesco, Roberto Galbiati, and Pietro Vertova, “The Deterrent Effects of Prison: Evidence from a Natural Experiment,” Journal of Political Economy, vol. 117, 2009, pp. 257-280.

Levitt, Steven, “The Effect of Prison Population Size on Crime Rates: Evidence from Prison Overcrowding Litigation.” Quarterly Journal of Economics, vol. 111, 1996, pp. 319-352.

Hopkins, Evans, “Letter From Prison: Lockdown,” New Yorker, February 24 & March 3, 1997, pp. 66-71.

Capital punishment and the legal system

Readings: **Donohue, John, and Justin Wolfers, “Uses and Abuses of Empirical Evidence in the Death Penalty Debate,” Stanford Law Review, 2005, 58:791-846.

**Abrams, David, and Albert Yoon, “The Luck of the Draw: Using Random Case Assignment to Investigate Attorney Ability,” University of Chicago Law School Working Paper, 2007. Chen, Keith, and Jesse, Shapiro, “Do Harsher Prison Conditions Reduce

Recidivism: A Regression-Discontinuity Approach,” American Law and Economics Review 9(1):1-29, 2007

Juvenile crime

Readings: **Levitt, Steven “The Exaggerated Role of Changing Age Structure on Aggregate Crime Rates,” Criminology 1999.

Levitt, Steven “Juvenile Crime and Punishment,” Journal of Political Economy 106, 1998, pp. 1156-1185.

Bennett, William, John DiIulio, and John Walters, Body Count, chapters 1 & 2. (A great example of getting things wrong)

Humes, Edward, No Matter How Loud I Shout, pp. 23-84. (Awesome book)

Fighting crime using approaches outside the criminal justice system

Readings: **Donohue, John and Steven Levitt, “The Impact of Legalized Abortion on Crime,” Quarterly Journal of Economics (May 2001), pp. 379-420.

**Jeff Kling, Jens Ludwig, and Lawrence Katz, 2005, “Neighborhood Effects on Crime for Female and Male Youth: Evidence from A Randomized Housing Voucher Program,” Quarterly Journal of Economics 120(1): 87-130.

Wilson, William Julius, The Truly Disadvantaged, chapters 1 & 2.

SPECIAL TOPICS

Economic factors, poverty, labor markets, and income inequality

Readings: **Raphael, Stephen, and Rudolf Winter-Ebmer, 2001, “Identifying the Effect of Unemployment on Crime," Journal of Law & Economics, 44(1): 259-284.

**Soares, Rodrigo, 2004, “Development, Crime, and Punishment: Accounting for the International Differences in Crime Rates,” Journal of Development Economics 73: 155-184.

Stephen Machin, and Costas Meghir, 2004, “Crime and Economic Incentives,” Journal of Human Resources 39(4): 958-979.

Miles, Thomas, 1998, “Pawn Shops, Crime, and Markets for Stolen Property,” Unpublished manuscript.

Drugs and alcohol

Readings: **Becker, Gary, Michael Grossman, and Kevin Murphy, “The Market for Illegal Goods: The Case of Drugs,” Journal of Political Economy, vol. 114, 2006, pp. 38-60.

**Miron, Jeff, “The Economic Case Against Drug Prohibition,” Journal of Economic Perspectives, vol. 9, Fall 1995, pp. 175-192.

MacCoun, Robert and Peter Reuter, Drug War Heresies.

Gangs

Readings: **Padilla, Felix, The Gang as an American Enterprise, chapter 4.

**Levitt, Steven, and Sudhir Venkatesh, “An Economic Analysis of a Drug-Selling Gang’s Finances,” Quarterly Journal of Economics, August 2000.

Bourgois, Phillipe, Selling Crack in El Barrio. (Good book)

Wall Street Journal, “Just Sell it: Where Gang Members are Shoe Salesmen,” Feb. 2, 1999

Race, Racial Profiling, and the criminal justice system

Readings: **Tonry, Michael, Malign Neglect, chapter 2.

**John Knowles, Nicola Persico, and Petra Todd, "Racial Bias in Motor Vehicle Searches: Theory and Evidence" Journal of Political Economy , February, 2001.

Lee, Jean, “The Process is the Punishment: Juror Demographics and Case Administration in State Courts,” Harvard Working Paper, 2010.

Kleck, Gary, “Racial Discrimination in Criminal Sentencing,” American Sociological Review, vol. 46, 1981, pp. 783-805.

Guns and gun control

Readings: **Sloan, J.H. et al., “Handgun Regulations, Crime, Assaults, and Homicide: A Tale of Two Cities,” New England Journal of Medicine, vol. 319(19), Nov. 1988, pp. 1256-1262. (Figure out what is wrong with this paper!)

**Duggan, Mark, “More Guns, More Crime,” Journal of Political Economy.

The National Research Council, Firearms and Violence: A Critical Review, Chapter 3. (available online at http://www.nap.edu/openbook.php?record_id=10881&page=53 )

Canada, Geoffrey, Fist, Stick, Knife, Gun. (Best book ever on crime.)

White Collar Crime, Cheating, Corruption, and Terrorism

Readings: **Fisman, Ray, “Estimating the Value of Political Connections,” American Economic Review, 2001.

** Levitt, Steven, and Ian Horsely, “Identifying Terrorists using Banking Data,” University of Chicago Working Paper, 2010.

**Jacob, Brian, and Steven Levitt, “Catching Cheating Teachers: The Results of an Unusual Experiment in Implementing Theory,” Brookings-Wharton Papers on Urban Affairs (2003): 185-209.

Duggan, Mark, and Steven Levitt, “Winning isn’t everything: Corruption in Sumo Wrestling,”American Economic Review, v92 (December 2002): 1594-1605.

Gambling, prostitution, and victimless crimes

Readings: ** Levitt, Steven, and Sudhir Venkatesh, 2007, “An Empirical Analysis of Street-level Prostitution,” University of Chicago Working paper, 2007.

Gertler, Paul, et al. “Risky Business: The Market for Unprotected Commercial Sex,” Journal of Political Economy, 113 (3), 518-50.

Levitt, Steven, “Why are Gambling Markets Organized so Differently than Financial Markets?” Economic Journal 114 (April 2004): 2043-2066.