Crime supply functions are reestimated in this paper using data corrected for victim underreporting. It is found in both a mean-variance specification and a conventional crime supply function, which includes measures of the offender's gains and losses involved in property crimes, that certainty and severity of punishment still deter. When correction for underreporting is made, the effects on the rates of robbery, burglary, larceny, and auto theft of increases in prison admission rates and prison sentence lengths remain negative. This seeming support for the "deterrence hypothesis" must be balanced against the strong evidence that improved legitimate opportunities have a negative effect on crime. Use of improved crime data and a more intuitive economic specification of the offense supply function leads to the conclusion that higher income is a better deterrent to some crimes than increased punishment.
Bibliographical noteFunding Information:
‘The research reported here was supported by funds granted to the Institute for Research on Poverty at the University of Wisconsin-Madison by the Department of Health, Education, and Welfare pursuant to the provisions of the Economic Opportunity Act of 1964.T he conclusions expressed herein are those of the author and should not be construed as reflecting the views of the Federal Trade Commission or any of its Commissioners. 148