Designing Experiments on Crime and Punishment

(The following outline has been provided by Cornelius Schneider)

Plan for the first three (joint) sessions of the seminar on “Crime and Punishment” and the seminar on experimental economics. Students in both groups will take the following three sessions jointly. Then students decide in which group they want to stay.

Session 1: Organizational Overview / Scientific Work / Intro “Econ of Crime”

Organizational Overview of the Seminar

• Aim of the Course
• Dates
• Contact
• Grading
• Regular active participation
• Regular presentations on individual progress of research proposal (see below)
• Detailed research proposal; about 1000 words (ca. 4 pages)
• Deadlines

Scientific Work

• What is the usual “work-flow” of setting up a new research project?
• What is a research question?
• How to frame a hypothesis?
• General structure of usual Econ research papers
  • (Also: How to efficiently read an Econ paper!)
• How to decently familiarize with / dive into a new strand of research?
• Who and what to read & cite; what are the better journals → rankings?
• How to write economic research papers
  • E.g.: What is a good introduction?

Intro “Economics of Crime”

• What are the “Economics of Crime”?
• What motivates the individual to commit a crime?
• How to shape institutions (i.e. laws) to efficiently prevent crime?
• E.g. Low prob / high fine or high prob / low fine?
• Theory of rational crime (Becker 1968)
  • Becker, Gary S. (1968), Crime and Punishment: An Economic Approach. Journal of Political Economy, 76(2), p. 169-217.
• Deterrence effect of punishment? What does the literature provide?
• Doob, A. N., & Webster, C. M. (2003). Sentence severity and crime: Accepting the null hypothesis. Crime and justice, 30, 143-195.
• DeAngelo, G., & Charness, G. (2012). Deterrence, expected cost, uncertainty and voting: Experimental evidence. Journal of Risk and Uncertainty, 44(1), 73100.
• Incentive structure, believes, decisions: Tax evasion (Allingham and Sandmo 1972)
• Example in experimental economics:
  • Collins, J. H., & Plumlee, R. D. (1991). The taxpayer's labor and reporting decision: The effect of audit schemes. Accounting Review, 559-576.

More general literature

• Rauhut H., Winter F. (2012) On the Validity of Laboratory Research in the Political and Social Sciences: The Example of Crime and Punishment. In: Kittel B., Luhan W.J., Morton R.B. (eds) Experimental Political Science. Research Methods Series. Palgrave Macmillan, London.

Session 2: How to Pick a Suitable Design I

Basic Setting of an Experiment: What is needed to establish causality?

• Treatment & Control Group
• Randomization
• Knowledge of confounding variables
• → correlation vs. causation!
• Internal vs. external validity
• Between-subject vs. within-subjects design
• Incentivation of an experiment – why are we paying our subjects?
  • “Incentive compatibility”

Types of Experiments

• Overview: chart with tradeoff between control/replicability vs. external validity
• Lab Experiment
  • Advantages / Disadvantages
  • Programs
  • Subject Pools
  • Also: lab-in-the-field experiments
  • Example lab experiment:
    • Smith, V. L. (1962). An Experimental Study of Competitive Market Behavior. Journal of Political Economy, 70(2), 111-137.
    • Falk, Armin and Urs Fischbacher (2002) ‘Crime in the Lab. Detecting Social Interaction’, European Economic Review, 46, 859–69.
    • Engel, Christoph and Henning-Schmidt, Heike and Irlenbusch, Bernd and Kube, Sebastian, On Probation: An Experimental Analysis (June 2015). Journal of Empirical Legal Studies, Vol. 12, Issue 2, pp. 252288, 2015.
• Online Experiment (Also: Survey Experiment)
  • Advantages / Disadvantages
  • Programs
  • Subject Pools
  • Example Online Experiment:
    • Suri, S., Goldstein, D. G., & Mason, W. A. (2011). Honesty in an Online Labor Market. Human Computation, 11(11), 61-66.

Session 3: How to Pick a Suitable Design II / Summary

• Field Experiment / RCT
  • Advantages / Disadvantages
  • Example Field Experiment:
    • Altmann, S., Falk, A., Jäger, S., & Zimmermann, F. (2018). Learning about job search: A field experiment with job seekers in Germany. Journal of Public Economics, 164, 33-49.
    • Kleven, Henrik, Martin Knudsen, Claus Kreiner, Søren Pedersen, and Emmanuel Saez (2010), Unwilling or Unable to Cheat? Evidence from a Tax Audit Experiment in Denmark, Econometrica, 79(3), p. 651-692.
• Natural Experiment / Quasi-Experiment
  • Advantages / Disadvantages
  • Random Shock
  • Sources of Data
    • Publicly Available Data
    • Build your own dataset (…be creative!)
  • Example Natural Experiment:
    • Chevalier, Arnaud, and Olivier Marie (2013), Economic Uncertainty, Parental Selection, and the Criminal Activity of the 'Children of the Wall', IZA Discussion Papers 7712.
    • Katz, Lawrence, Steven Levitt, and Ellen Shustorovich (2003), Prison Conditions, Capital Punishment, and Deterrence, American Law and Economics Review, 5(2), p. 318-343.
    • Draca, Mirko, Steve Machin, and Robert Witt (2011), Panic on the Streets of London: Police, Crime and the July 2005 Terror Attacks, American Economic Review, 101(5), p. 2157-81.

Summary

• Overview of previously learned experiments types / data sources / …

After the first three sessions, participants decide whether the take the “Crime and Punishment” seminar, or whether they take “Crime and Punishment” only as an example and choose a free topic.

The following applies mainly to students who stay in the “Crime and Punishment” group.

Sessions 4 – End

Students present along the following milestones (as far as the progress of the individual project allows):

1. Research question
2. Experimental design (first idea)
3. Experimental design (revised)
4. Data (existing datasets or own data)
5. Empirical strategy
6. Final presentation (Presentation of results or elaborate research proposal including empirical strategy and anticipated results)

Full Literature List

• Allingham, M. G., & Sandmo, A. (1972). Income tax evasion: A theoretical analysis. Journal of public economics, 1(3-4), 323-338.
• Altmann, S., Falk, A., Jäger, S., & Zimmermann, F. (2018). Learning about job search: A field experiment with job seekers in Germany. Journal of Public Economics, 164, 33-49.
• Becker, Gary S. (1968), Crime and Punishment: An Economic Approach. Journal of Political Economy, 76(2), p. 169-217.
• Chevalier, Arnaud, and Olivier Marie (2013), Economic Uncertainty, Parental Selection, and the Criminal Activity of the 'Children of the Wall', IZA Discussion Papers 7712.
• Collins, J. H., & Plumlee, R. D. (1991). The taxpayer's labor and reporting decision: The effect of audit schemes. Accounting Review, 559-576.
• DeAngelo, G., & Charness, G. (2012). Deterrence, expected cost, uncertainty and voting: Experimental evidence. Journal of Risk and Uncertainty, 44(1), 73-100.
• Doob, A. N., & Webster, C. M. (2003). Sentence severity and crime: Accepting the null hypothesis. Crime and justice, 30, 143-195.
• Draca, Mirko, Steve Machin, and Robert Witt (2011), Panic on the Streets of London: Police, Crime and the July 2005 Terror Attacks, American Economic Review, 101(5), p. 2157-81.
• Engel, Christoph and Henning-Schmidt, Heike and Irlenbusch, Bernd and Kube, Sebastian, On Probation: An Experimental Analysis (June 2015). Journal of Empirical Legal Studies, Vol. 12, Issue 2, pp. 252-288, 2015, Available at SSRN: https://ssrn.com/abstract=2600723 or http://dx.doi.org/10.1111/jels.12072
• Falk, Armin and Urs Fischbacher (2002) ‘Crime in the Lab. Detecting Social Interaction’, European Economic Review, 46, 859–69.
• Kleven, Henrik, Martin Knudsen, Claus Kreiner, Søren Pedersen, and Emmanuel Saez (2010), Unwilling or Unable to Cheat? Evidence from a Tax Audit Experiment in Denmark, Econometrica, 79(3), p. 651-692.
• Rauhut H., Winter F. (2012) On the Validity of Laboratory Research in the Political and Social Sciences: The Example of Crime and Punishment. In: Kittel B., Luhan W.J., Morton R.B. (eds) Experimental Political Science. Research Methods Series. Palgrave Macmillan, London.
• Smith, V. L. (1962). An Experimental Study of Competitive Market Behavior. Journal of Political Economy, 70(2), 111-137.
• Suri, S., Goldstein, D. G., & Mason, W. A. (2011). Honesty in an Online Labor Market. Human Computation, 11(11), 61-66.

More general experimental and experimetrics literature

• Falk, A., & Heckman, J. J. (2009). Lab experiments are a major source of knowledge in the social sciences. science, 326(5952), 535-538.
• Moffatt, P. G. (2015). Experimetrics: Econometrics for experimental economics. Macmillan International Higher Education.
• Mostly Harmless Econometrics: An Empiricist's Companion, Princeton UP, NJ.
• Shadish, W. R., Cook, T. D., & Campbell, D. T. (2002). Experimental and quasiexperimental designs for generalized causal inference/William R. Shedish, Thomas D. Cook, Donald T. Campbell. Boston: Houghton Mifflin.