People cheered when, in the 1990s, Speaker of the House Newt Gingrich advocated mandatory executions for drug dealers. But economists wondered why Gingrich wanted to decrease the penalty for murder. How does the death penalty for drug dealers decrease the penalty for murder? Think about it this way: Suppose that Gingrich’s bill becomes law and the police bust into an apartment where three drug dealers have hidden their stash. What happens? The drug dealers know that if they give up, they will be put to death. So why not try to kill the police? If the dealers are lucky, they get away. If the dealers are unlucky, they are no worse off than if they didn’t fight because when drug dealing is a capital offense, drug dealers face no additional penalty for murder.
Tyler Cowen and Alex Tabarrok, Modern Principles: Microeconomics (3rd Edition), 2015.
July 2, 2018
QotD: Perverse incentives, death penalty edition
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