New Economics Papers
on Law and Economics
Issue of 2014‒03‒22
eight papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. Key Players in Co-Offending Networks By Lindquist, Matthew J.; Zenou, Yves
  2. Criminality spread: a "Boomerang effect" of public transport improvements?. By Carlos Augusto Olarte Bacares
  3. Suicide and Property Rights in India By Siwan Anderson; Garance Genicot
  4. The Nature of Corruption - An Interdisciplinary Perspective By Eugen Dimant
  5. Testing the Endowment Effect for Default Rules By Isabel Marcin; Andreas Nicklisch
  6. Crime and Mental Wellbeing By Cornaglia, Francesca; Feldman, Naomi E.; Leigh, Andrew
  7. Who is afraid of the big bad ban? An evaluation of the effects of the Spanish clean air law on expenditure at hospitality venues By Jaume Garcia Villar; Ángel López-Nicolás
  8. Greasing the Wheels? The Effect of Corruption in Regulated Manufacturing Sectors of India By Takahiro Sato; Atsushi Kato

  1. By: Lindquist, Matthew J. (SOFI, Stockholm University); Zenou, Yves (Stockholm University)
    Abstract: We study peer effects in crime by analyzing co-offending networks. We first provide a credible estimate of peer effects in these networks equal to 0.17. This estimate implies a social multiplier of 1.2 for those individuals linked to only one co-offender and a social multiplier of 2 for those linked to three co-offenders. We then provide one of the first empirical tests of the key player policy in a real world setting. This policy defines a micro-founded strategy for removing the criminal from each network that reduces total crime by the largest amount. Using longitudinal data, we are able to compare the theoretical predictions of the key player policy with real world outcomes. By focusing on networks for which the key player has disappeared over time, we show that the theoretical predicted crime reduction is close to what is observed in the real world. We also show that the key player policy outperforms other reasonable police policies such as targeting the most active criminals or targeting criminals who have the highest betweenness or eigenvector centrality in the network. This indicates that behavioral-based policies can be more efficient in reducing crime than those based on algorithms that have no micro-foundation.
    Keywords: crime, social networks, peer effects, social multiplier, key player, crime policies
    JEL: A14 K42 Z13
    Date: 2014–02
  2. By: Carlos Augusto Olarte Bacares (Centre d'Economie de la Sorbonne)
    Abstract: The relationship between accessibility or the degree of improvement of urban transport and criminality has been underestimated and close to forgotten. This paper aims to reveal the importance of public transport policies in the evolution of crime configuration in a city. The hypothesis that the probability of transport improvements in a zone depends on some of its socio-economic characteristics is adopted. The use of the propensity score matching technique reveals that the presence of improvements of public transport in a zone of the city has a direct and significant impact on the increase of some types of crime. Likewise, spatial econometrics results expose that crime tends to be contagious in neighbouring zones. The presence of the Transmilenio system in Bogota may share out criminality to other zones of the city. Negative externalities like the better mobility of offenders and, then, their possible choice to expand their criminal activities to new zones, can spoil the positive effects of enhancement of public transport. Far from suggesting no developing public transport or isolating some “dangerous” neighbourhoods or inhabitants, this article shows that improvement of public transport may not only generate positive externalities; policy makers should take into consideration the mutation and shift of criminal behaviours in order to identify possible solutions such as the construction of more establishments providing health, welfare and sporting activities, as is evoked in the results. In this way, the “boomerang effect” of the improvement to transport will be reduced.
    Keywords: Urban public transports improvements, propensity score matching, crime contagion, spatial dependence.
    JEL: C31 K42 R12 R15
    Date: 2014–03
  3. By: Siwan Anderson; Garance Genicot
    Abstract: This paper studies the impact of female property rights on male and female suicide rates in India. Using state level variation in legal changes to women's property rights, we show that better property rights for women are associated with a decrease in the difference between female and male suicide rates, but an increase in both male and female suicides. We conjecture that increasing female property rights increased conflict within household and this increased conflict resulted in more suicides among both men and women in India. Using individual level data on domestic violence we find evidence that increased property rights for women did increase the incidence of wife beating in India. A model of intra-household bargaining with asymmetric information and costly conflict is consistent with these findings.
    JEL: D1 K36 O1
    Date: 2014–03
  4. By: Eugen Dimant (University of Paderborn)
    Abstract: Corruption has fierce impacts on economic and societal development and is subject to a vast range of institutional, jurisdictional, societal and economic conditions. Research indicates that corruption’s predominantly negative effects have arisen to a massive trans-border threat while creating high obstacles to sustainable and prospective development, ultimately impairing everybody’s life. This paper provides a comprehensive state-of-the-art review of existing literature on corruption and its antecedents and effects. Consequently, we bridge the gap between existing theories of different fields of research including economics, psychology, and criminology in order to draw a conclusive picture of corruption on the micro-, meso- and macro-level.
    Keywords: Bribery, Corruption, Development, Interdisciplinarity, Public Economics, Survey
    JEL: D73 H1 O17 K42
    Date: 2014–05
  5. By: Isabel Marcin (Max Planck Institute for Research on Collective Goods, Bonn); Andreas Nicklisch (University of Hamburg, School of Business, Economics and Social Science & Max Planck Institute for Research on Collective Goods, Bonn)
    Abstract: This paper explores potential endowment effects of contractual default rules. For this purpose, we analyze the Hadley liability default clause in a model of bilateral bargaining of lotteries against safe options. The liability default clause determines the right for the safe payoff option. We test the model in series of laboratory experiments. The results reveal a substantial willingness-to-accept to willingness-to-pay gap for the right to change lotteries against safe options. Even if we apply the incentive compatible Becker-DeGroot-Marschak value elicitation mechanism, there is a significant gap indicating a robust endowment effect caused by default rules. Differences of expected values of the lotteries and the safe options consistently decrease the gaps. Implications for applications of default rules in the law are discussed.
    Keywords: lotteries, Default rules, Endowment effect
    JEL: K00 C91 K12
    Date: 2014–01
  6. By: Cornaglia, Francesca (Queen Mary, University of London); Feldman, Naomi E. (Federal Reserve Board); Leigh, Andrew (Australian National University)
    Abstract: We provide empirical evidence of crime's impact on the mental wellbeing of both victims and non-victims. We differentiate between the direct impact to victims and the indirect impact to society due to the fear of crime. The results show a decrease in mental wellbeing after violent crime victimization and that the violent crime rate has a negative impact on mental wellbeing of non-victims. Property crime victimization and property crime rates show no such comparable impact. Finally, we estimate that society-wide compensation due to increasing the crime rate by one victim is about 80 times more than the direct impact on the victim.
    Keywords: crime, mental wellbeing, neighbourhood effects, non-victims
    JEL: I31 R28
    Date: 2014–03
  7. By: Jaume Garcia Villar; Ángel López-Nicolás
    Abstract: Background: In January 2011 Spain modified clean air legislation in force since 2006, removing all existing exceptions applicable to hospitality venues. Although this legal reform was backed by all political parties with parliamentary representation, the government's initiative was contested by the tobacco industry and its allies in the hospitality industry. One of the most voiced arguments against the reform was its potentially disruptive effect on the revenue of hospitality venues. This paper evaluates the impact of this reform on household expenditure at restaurants and bars and cafeterias. Methods and empirical strategy: We use micro-data from the Encuesta de Presupuestos Familiares (EPF) for years 2006 to 2012 to estimate "two part" models where the probability of observing a positive expenditure and, for those who spend, the expected level of expenditure are functions of an array of explanatory variables. We apply a before-after analysis with a wide range of controls for confounding factors and a flexible modeling of time effects. Results: In line with the majority of studies that analyze the effects of smoking bans using objective data, our results suggest that the reform did not cause reductions in households' expenditures on restaurant services or on bars and cafeteria services.
    Keywords: smoke free laws, hospitality venues, household expenditure, Spain.
    Date: 2014–02
  8. By: Takahiro Sato (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan); Atsushi Kato (School of Business, Aoyama Gakuin University)
    Abstract: We investigate whether corruption “greases the wheels” of bureaucracies and enhances economic performance. Specifically, we examine the interaction effect of corruption and regulation on the economic performance of manufacturing industries in India. Our estimation results show that the combination of corruption and regulation has significant positive effects on gross value added per worker, total factor productivity, and capital labor ratio. This indicates the existence of a “greasing the wheels” effect.
    Keywords: corruption, regulation, gross value added per worker, TFP
    JEL: D73 K42 L52 K23
    Date: 2014–03

This issue is ©2014 by Eve-Angeline Lambert. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.