In the US, a murder costs a little over 17 million dollars.
A group of researchers crunched data for over 650 murders in eight states and used a formula with parameters for lost murderer productivity costs, judicial expenses, and victim losses to come up with that number as an “average per murder”. And because each murderer typically commits around 1.4 known murders, using the formula you get around 24 million dollars per criminal.
So, if you really need an economic reason why these heinous crimes are a burden on society, now you’ve got a pretty big number based on some hard-to-explain models.
I also understand that legally, and perhaps morally, the idea that the “value” of every human life should be the same is a valid concept. But economically?
Now if you’ll excuse me, I’ll go ahead and a make a distasteful point: the cost incurred from the murder of a highly-paid CEO of a Fortune 500 company with a high-premium life insurance is not the same as that of a hobo with an incurable ailment, no insurance, and no next-of-kin.
And since I’m going to be offensive, why not go the whole hog?
Consider this scenario: A group of five sophisticated thieves rob a bank for 40 million dollars. The heist gets botched and they end up shooting a young security guard who had thirty years of work left before retirement. They also kill a widower who had been drawing a steady pension and would have otherwise lived for another twenty years. A college student is shot and maimed for life but doesn’t die: he becomes a financial strain on his unmarried sister. The thieves then escape to Mexico in a stolen Mercedes and spend 30 million of the loot. The government spends millions of dollars trying to track these fugitives in order to bring them to justice. After twenty years, three of the five get caught and are brought back into the country. One gets the death penalty while others serve life sentences in jail.
Add. Subtract. Multiply. Divide. And get back to me when you’ve figured out the real cost of this simple crime.
© Text, 2010-2012, Anirban
milkmiracle.net 
Wondering what made you think of economics of crime 🙂
Made for a great laugh. And enough food for thought for finance ministers all across the world. Great.
Thank you, sirjee!
I read a press release on the paper. I find the work that these researchers are performing commendable. It isn’t my line of work and I don’t understand the details so I encourage everyone to take my take whimsically.
But I am skeptical because I understand how complex crime can be especially when you have multiple criminals involved in multiple different crimes over long timescales. How do you fairly split the costs to society? Also how do you fairly decide how to convert the loss of life to a monetary amount.
My assertion is simply that you can’t!
🙂