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Interview with Jens Ludwig, Ph.D. - Benefit-Cost Analysis for Crime Policy

This interview followed the presentation "Benefit-Cost Analysis for Crime Policy" given as part of NIJ's Research for the Real World Seminar Series by Jens Ludwig, Ph.D., University of Chicago.

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Benefit-Cost Analysis

Jens Ludwig: A lot of people in research and practitioner communities seem to think that benefit-cost analysis is really just about taking dollar values and monetizing impacts of crime control interventions. But a benefit-cost analysis is only as useful as the program evaluation upon which it's built. You need to understand, and be sure that you understand the causal effects of the policy or the program that you're evaluating for starters in order for a benefit-cost analysis to really be of any use for policy makers.

Defining Opportunity Costs

The opportunity cost is the value of what I could've been doing instead. And so one way to think about how you would put a dollar value on that is if I were to work extra hours, say, if I were to pick up a second job and do that on Saturday mornings or after school. That second job would pay me some wage and we think that that wage reflects my value to society for those extra hours and that's one way to think about what the dollar value of the opportunity cost is of the time that I donate to a mentoring or a tutoring program to try and steer high-risk kids away from delinquency and violent behavior.

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The Intangible Costs of Crime

It's not the dollar value of the iPad that someone took from you, it is the intangible costs associated with the fear and the emotional costs that come from having someone stick a gun in your face and demand your iPod. At that point, your iPod or your iPad is the last thing that you care about. I think that the ... there's a very very small literature in criminology and the economics of crime that tries to assign dollar values to these intangible costs of crime. And I think what is reassuring is that the numbers that we have so far tend to make sense, in the sense that they fit more or less reasonably well along side each other, and they also fit reasonably well alongside research that you see in other areas of public policy that try to value intangible costs.

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NIJ Research for the Real World Seminar
February 2011
Roseanna Ander, Executive Director, University of Chicago Crime Lab
Jens Ludwig, Director, University

How do we decide how to allocate criminal justice resources in a way that minimizes the social harms from both crime and policy efforts to control crime? How, for that matter, do we decide how much to spend on the criminal justice system and crime control generally, versus other pressing needs? These questions are at the heart of benefit-cost analysis.

Benefit-cost analyses begin with the crucial and often under-appreciated first step of successfully identifying the impact of a policy or program. Jens Ludwig and Roseanna Ander will explain the different options for identifying policy and program impacts, and discuss the challenges of attempts to monetize costs and benefits. For example, some of the most important costs and benefits of crime control efforts come from intangible aspects of well-being for which dollar values are not easily attached.

We also captured a short Interview Mr. Ludwig in two parts:

  • Benefit-Cost Analysis
  • The Intangible Costs of Crime

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Date created: February 24, 2011