Victim Compensation Policy and White‐Collar Crime

• DOI: http://doi.org/10.1111/1745-9133.12379
• Author: Mark A. Cohen,Thomas A. Loughran,Sally S. Simpson,Miranda A. Galvin
• Date: 01 August 2018
• Published date: 01 August 2018

RESEARCH ARTICLE

VICTIM COMPENSATION AND

WHITE-COLLAR CRIME

Victim Compensation Policy and White-

Collar Crime

Public Preferences in a National Willingness-to-Pay Survey

Miranda A. Galvin

University of Maryland—College Park

Thomas A. Loughran

Pennsylvania State University

Sally S. Simpson

University of Maryland—College Park

Mark A. Cohen

Vanderbilt University

Research Summary

We use survey data from a nationally representative sample to explore public sup-

port for taxpayer-funded victim compensation programs for financial fraud, consumer

fraud, identity theft, and burglary. We use contingent valuation (willingness-to-pay)

methodology to infer preferences for compensation programs and explore predictors of

those preferences. Overall, our findings reveal that the public strongly supports the

implementation of victim compensation programs. Our results also indicate, however,

that this support may be driven in part by perceptions of benefiting from this program

directly in the future. Additionally,a small but notable minority of respondents exhibit

preferences for programs without compensation.

This project was supported by Award 2013-IJ-CX-0058, granted by the National Institute of Justice, Office of

Justice Programs, U.S. Department of Justice. The opinions, findings, and conclusions or recommendations

expressed in this publication are those of the author(s) and do not necessarily reflect those of the Department

of Justice. All code and analyses conducted as part of this article are available by request. Direct

correspondence to Miranda A. Galvin, Department of Criminology and Criminal Justice, University of

Maryland, 2220 LeFrak Hall, College Park, MD 20742 (e-mail: magalvin@umd.edu).

DOI:10.1111/1745-9133.12379 C2018 American Society of Criminology 553

Criminology & Public Policy rVolume 17 rIssue 3

Research Article Victim Compensation and White-Collar Crime

Policy Implications

Our findings suggest that the general public is supportive of restitutive compensation

programs, not only as paid for by offenders but also as paid for by the government. We

suggest that policy makers may seek to extend victim compensation funds to white-collar

crimes, which may otherwise be more financially damaging than traditional crimes.

Keywords

victim compensation, public preferences, willingness to pay, white-collar crime, fraud

Estimates of the cost of crime to victims range into hundreds of billions of dollars.

Yet, crime victims seldom receive full compensation for the monetary harms they

endure, such as property loss or damage, lost wages, medical, or mental health

care costs. Indeed, restitution is not mandatory in all jurisdictions, and even when it is,

judges often reduce the amount based on the offender’s ability to pay.1Beginning in

the 1960s, various government-sponsored victim compensation funds were established to

augment restitution (Kauffman and Samuels, 2014). Given the limited financial means of

many offenders (Rabuy and Kopf, 2015), and the limited victim compensation program

funding that relies mainly on offender fines and penalties, relying upon restitution and/or

victim compensation programs is unlikely to provide adequate funding to ensure victims

are restored to their previctimization financial state. For example, victim compensation

programs provide an estimated $500 million annually to 200,000 victims, which is

only a small fraction of the millions of Americans who are victimized by crimes in the

United States (see the National Association of Crime VictimCompensation Board website:

nacvcb.org/index.asp). Anderson (2012) estimated that crime victims lose $14.7 billion

annually in wages alone. The most recent victimization survey (Trumanand Morgan, 2016:

Table 6) estimated that only 9% of violent crime victims receive any form of assistance

from victim assistance programs (including assistance in obtaining restitution and/or victim

compensation). To increase victim compensation funding would likely require additional

revenue sources beyond the current stream of penalties and fines.2

Not only are crime victims underserved by victim compensation programs, but also

these programs are limited in the scope of crimes included. Programs seldom cover victims

of burglary,theft, and fraud, and compensation is generally unavailable for victims who were

not physically injured (Kauffman and Samuels, 2014). Yet the costs of consumer fraud are

1. Cohen (2005) cited data indicating that restitution is ordered in only approximately 15% of felony

convictions, and even when ordered, only half of the amounts ordered are collected.

2. Although currently approximately $600 million annually is diverted from direct victim compensation

from the Crime Victims Fund to other forms of victim assistance-related grants, even this level of

funding would not come close to satisfying the potential need. See Statement of Congressman Bob

Goodlatte, House Judiciary Committee Oversight Hearings, June 8, 2017

(judiciary.house.gov/press-release/goodlatte-statement-hearing-department-justices-grant-programs/).

554 Criminology & Public Policy

Galvin et al.

high. For example, Cohen (2016) estimated the out-of-pocket costs to victims of identity

theft (aside from the cost to banks and other organizations who bear the largest direct

costs) total $13 to $32 billion, whereas the cost of consumer fraud is estimated to range

between $4 and $12 billion. These costs far outweigh the funds currently available for victim

compensation programs. In a recent study of victim compensation programs, Evans (2014:

17) recommended that state programs “address victims of other types of prevalent crime,

including financial fraud.” Some scholars have argued that the scope of property crimes

would create a compensation program so large, and (presumably) easy to take advantage

of, that “where it is the taxpayer who funds the arrangements, [compensation programs for

nonviolent crime] are financially and thus politically prohibitive” (Miers, 2014: 156). This

assumption, however, may not be an accurate representation of public support for victim

compensation programs for nonviolent crimes. In fact, there is scant empirical research

on the degree of public support for victim compensation programs in general, despite the

existence of some compensation programs for more than three decades (Cohen, 2005;

Miers, 2014). Furthermore, we are unaware of any evidence on whether taxpayer-funded

programs have public support.

In studying how the public tends to view victim compensation for crimes, scholars have

been primarily concerned with public acceptance for restitution, or the financial payment

to victims by offenders, as a punishment alternative. Researchers have generally found broad

public support for financial over carceral sanctions, both in the United States (e.g., Bae,

1991, 2000; Doble, 1987; Doble and Klein, 1989; Knowles, 1987; Umbreit, 1994) and

internationally (e.g., Boer and Sessar, 1989; Doob and Roberts, 1988; Galaway, 1994a,

1994b). A general gap in this literature concerns how the public views victim compensation

provided through government programs, rather than as part of an offender’s sentence, as a

policy option. In this study, we provide evidence on whether the public supports taxpayer-

funded victim compensation programs, and we test hypotheses that individuals should

tend to be more supportive of a crime reduction policy that includes allotments for victim

compensation by relying on assumptions of altruism and social preferences for fairness. A

large body of research comprises evidence for altruism (seemingly non–utility-maximizing

behavior that results in a benefit to another person). Yet, observed behavior nominally

labeled as “altruism” may also stem from rational, self-benefiting considerations, or, what

are generally recognized as social preferences (Charness and Rabin, 2002). It may be that

public support for compensation programs is not driven by social preferences for fairness or

a general willingness to benefit others, but instead could stem from perceptions that these

policies will directly benefit them based on past experience or expectations for the future.

These motivations are at odds, but they underscore a question at the core of many victim

compensation programs—are these programs funded out of empathy and desire to insulate

the victim from extended harm (e.g., Ministry of Justice, 2012: para. 149)? Or are victim

compensation programs a form of public insurance against our “statistically determinable

risk of victimization” (Miers, 2014: 155).

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