HARSHER PUNISHMENTS FOR WHITE COLLAR CRIME
HARSHER PUNISHMENTS FOR WHITE COLLAR CRIME
Harsher Punishments for White-Collar Crime
Will amping up the punishment for white-collar crimes lead to a decline in the crime rate? Capital punishment is the final frontier in enforcement. Given that there is no way to go back or overturn an error in prosecution or conviction, many nations do not have capital punishment. The death penalty remains a politically charged issue worldwide.
Researchers, Rajeev K. Goel and Ummad Mazhar, examine whether capital punishment acts as a deterrent to white-collar crimes, especially corruption and the shadow economy. Both corruption and shadow economy are widely prevalent around the world, and often the two are intertwined. According to Goel and Mazhar, “Corruption can promote the underground sector and underground operators might use bribes to set up/continue operations.” Additionally, the two can also be seen as undermining institutions since enforcement is undermined with corruption and detection or abuse becomes difficult in the underground economy.
Using data on nearly 150 nations and various dimensions of capital punishment, including capital punishment for non-violent crimes, the empirical analysis conducted by the authors reveals mixed statistical support for the effectiveness of capital punishment for white-collar crimes. Interestingly, the deterrence of capital punishment was not felt in nations that had such punishment on paper but had not exercised it in more than a decade. According to their research, Goel and Mazhar found that the deterrence effect of capital punishment on the shadow economy was more prevalent than that on corruption. Results show some trade-off between the quantity and quality of punishment. This trade-off might provide some options for policy makers faced with rising crime rates, along with a lack of general public support for the death penalty. In such instances, improvements in the quality of governance, for example, via a better rule of law, would accomplish the goal of lowering crime rates (rather than imposing a death penalty).
This new research has potential policy value, as lawmakers around the world continue to grapple with effective ways of controlling corruption and the shadow economy.
Goel, R.A., & Mazhar, U. (2018). Does capital punishment deter white-collar crimes? The World Economy, 1-25.
About the Author
Ummad Mazhar is assistant professor at the SDSB, LUMS. He teaches microeconomics and macroeconomics. His research interests include macroeconomic determinants of firm performance, corruption, informal sector, and political violence. His work has been published in the World Development, The World Economy, The B.E. Journal of Economic Analysis and Policy, Economic Modelling, and International Journal of Conflict Management.