'Eggshell' victims, private precautions, and the societal benefits of shifting crime.

• Author: Mikos, Robert A.

Individuals spend billions of dollars every year on precautions to protect themselves from crime. Yet the legal academy has criticized many private precautions because they merely shift crime onto other, less guarded citizens, rather than reduce crime. The conventional wisdom likens such precaution-taking to rent-seeking: citizens spend resources to shift crime losses onto other victims, without reducing the size of those losses to society. The result is an unambiguous reduction in social welfare. This Article argues that the conventional wisdom is flawed because it overlooks how the law systematically understates the harms suffered by some victims of crime, first, by ignoring some types of harm altogether in grading and sentencing decisions, and second, by ignoring wide disparities in the amount of harm caused in individual cases. It follows that the same "crime", as defined by the law, may inflict significantly different amounts of harm on different victims, and by aggregation, on society. Thus it cannot be safely assumed that displacing a given crime from one citizen to the next is necessarily wasteful, from a social point of view. Indeed, this Article argues that shifting crime may be beneficial to society, from an economic point of view, since eggshell victims--those who are harmed more by crime--tend to take more precautions. The implication is that private crime fighting efforts that displace crime--universally criticized in the literature--may be more socially useful than previously acknowledged. The Article concludes by discussing how this insight impacts the ongoing debates over the regulation of precaution-taking.

TABLE OF CONTENTS INTRODUCTION I. THE ECONOMIC THEORY OF CRIME DISPLACEMENT A. The Private Incentives to Take Precautions B. The Types of Precautions That Displace Crime C. Why Displacement Is Considered Necessarily Wasteful D. The Impact of Displacement on Policy Discourse II. THE DISCREPANCY BETWEEN LAW AND HARMS A. The Law Ignores Some Harms 1. The Loss of Sentimental Value 2. Search Costs 3. Unforeseeable Harms B. The Law Ignores Variances in the Degree of Harm 1. Pecuniary Losses 2. Physical Injuries 3. Psychological Harms C. Distinguishing Victim Harms and Offender Benefits D. Summary III. A THEORY OF BENEFICIAL DISPLACEMENT A. Displaced Crimes Are Generally Less Harmful Crimes B. Potential Market Failures 1. Wealth Constraints 2. Information Distortions 3. Domino Effects C. Rethinking the Regulation of Private Precautions CONCLUSION INTRODUCTION

The legal academy is paying increased attention to the precautions ordinary citizens take to protect themselves from crime, (1) and for good reason. Citizens of the United States spend more on private precautions--estimates range from $160 billion to $300 billion per year--than on the entire public law enforcement budget. (2) That is, citizens spend more on locks, neighborhood watches, and the like than U.S. governments (state and federal) spend on police, judges, prosecutors, prisons, and prison guards. And these already high estimates of private crime-fighting expenditures may not reflect the total economic cost of precautions, including opportunity costs, like foregoing an evening out, and other difficult-to-monetize costs, like the effort expended walking a friend home at night. (3)

In some situations, private precautions represent an attractive, low-cost alternative to more traditional crime-fighting tactics, like hiring more police or building more prisons. (4) For example, some legal scholars have suggested that private citizens may be particularly effective at combating certain types of crime, such as cybercrime and identity theft. (5) More commonly, however, scholars claim that many of the resources spent in the private war on crime are being wasted because many private precautions only shift crime onto other, less guarded citizens. (6) The conventional wisdom is that any time a crime is displaced by a precaution from one victim to another, the precaution-taker's private gain is simply offset by the substitute victim's loss. Thus, precautions that do no more than shift crime produce no societal benefit. But they do have costs: after all, it takes money, time, and energy to protect oneself from crime. It follows that precautions that displace crime are necessarily wasteful and inefficient, from a social point of view. Professors Robert Cooter and Tom Ulen, in their influential text, summarize the prevailing view: "Redistributing crime has no net social benefit." (7) In economic terms, precautions that only shift crime constitute rent-seeking behavior: individuals expend resources to transfer losses, without reducing the size of those losses. (8)

An example illustrates the point. Suppose a thief sets out to steal a single car from a crowded parking lot. The thief spies several cars in the lot that suit his needs and tastes. However, the thief notices that one car is protected by an antitheft device, while the others are not. Given that it would take him some time to overcome this precaution, the thief--having no reason to prefer the protected car to the others--decides to take one of the unprotected cars instead. In this example, the precaution did not reduce crime, it merely displaced it. It is easy to see why, from a social point of view, existing scholarship considers such precaution-taking wasteful. Although the car's owner incurred costs in protecting her vehicle, she generated no corresponding societal benefit; that is, there was no net reduction in crime.

Concerns over crime displacement have also played an important role in policy debates over both public and private crime-control measures. (9) Given the prevailing view that displacement is necessarily wasteful, policy makers have sought to discourage or even ban the use of precautions that merely displace crime onto other citizens. Two prominent criminologists have observed as follows:

There is little point in the policy maker investing resources and effort into situational prevention if by doing so he merely shuffles crime from one area to the next but never reduces it. For this reason the possibility of displacing crime by preventative intervention is a crucial issue for the policy maker. (10) This Article argues that extant scholarship and subsequent policy debates have mistakenly condemned displacement on efficiency grounds. The scholarly literature incorrectly assumes that the societal cost of any given crime is identical for all victims. By making this assumption, the literature has overlooked the societal benefits of displacing crime.

The Article demonstrates that the way the law grades and punishes crime systematically understates the magnitude of the harms suffered by some victims--whom this Article calls "eggshell" victims. (11) First, the law ignores some types of harm, such as the destruction of sentimental value, in grading and punishing criminal offenses. Second, the law treats some criminal acts the same, in spite of the fact that the harms inflicted by them are obviously different. In some jurisdictions, for example, the theft of $100,000 is treated the same as the theft of $200,000; both are considered "grand larceny" and trigger identical sanctions. For both reasons, any two instances of the same "crime" (as presently defined by the law) may impose different societal costs. Thus it cannot be safely assumed that displacing any given crime from one citizen to the next is necessarily wasteful, from a social point of view. Society is better off when crime is committed against typical (i.e., low-harm), as opposed to eggshell victims. Hence, to the extent a precaution steers crime away from eggshell victims--who are more likely to purchase the precaution--it has some social value, even if it does not reduce the crime rate. This argument has profound implications for the private war on crime and the ongoing debate over crime displacement.

The Article proceeds as follows. Part I discusses the economics of private precautions and briefly reviews the legal, economic, and criminological literature on the subject. This Part explains why the literature has been so uniformly critical of displacement, and how that assessment has affected policy discourse. Part II then critiques the assumption made in the extant scholarship that the societal cost of any given crime is identical across victims. It argues that the way the law grades and punishes crime is a poor proxy for the total harm done in any individual case. It also explains why eggshell victims are not more attractive targets for criminals, and thus why shifting crime can reduce the cost of crime to society without simultaneously reducing the incentives to commit crime. Finally, Part III explains why precautions tend to shift crime from eggshell victims onto lower-harm victims, resulting in a net reduction in the societal cost of crime. It also discusses the implications for policy making. The Conclusion offers some observations on future research, including noneconomic considerations that may play a larger role in the debate over crime displacement in the future.

1. THE ECONOMIC THEORY OF CRIME DISPLACEMENT

   Much of the extant legal and economic scholarship on precautions and crime control is devoted to studying the displacement phenomenon. Section I.A discusses the private incentives to take precautions. It explains that private precautions generate externalities--including crime displacement--and, as a result, private citizens may take more or less than the socially optimal level of precautions. Section I.B focuses on the most studied and influential externality--that of crime displacement--and examines the conditions under which precautions are likely to displace crime onto other citizens. Section I.C then explores why legal theorists and economists have concluded that precautions that displace crime generate no societal benefit and are thus necessarily wasteful, from a societal perspective. Section...