Economic Analysis of Crime: How much does it cost (not) to invest in security?
Have you ever wondered why, even with stricter laws and increasingly overcrowded prisons, crime remains one of Brazil's biggest challenges?
The answer may lie not in the quantity of laws or the severity of penalties, but in how, and where, we invest our resources.
This is where the so-called Economic Analysis of Crime comes in, an approach that can completely change the way we view public safety.
Why does a criminal choose crime?
To say that a criminal makes a rational decision may, at first glance, sound insensitive or reductionist.
However, that was precisely the provocation made by Gary Becker, an economist at the University of Chicago, in his groundbreaking article "Crime and Punishment: An Economic Approach ," originally published in 1968.
The now-established thesis broke paradigms by applying the logic of rational choice to the universe of crime, a field previously dominated by sociological, moral, or biological explanations.
Becker started from a simple premise: breaking the law is a rational course of action in the face of poorly distributed economic incentives.
In this way, the individual calculates whether committing a crime is worthwhile based on three factors:
- Expected benefit from criminal conduct (such as the value of a robbery or fraud);
- Likelihood of being caught and convicted;
- Severity of the punishment applied if caught.
If the expected return outweighs the costs involved, crime becomes a rational choice, albeit a socially undesirable one.
Becker described this process as an extension of the classic economic model: "people respond to incentives." This means that crimes do not occur solely due to deviant behavior, but because there are flaws in the deterrent system.
In the article itself, Becker presented economic estimates of the cost of crime in the United States at the time: approximately US$21 billion in 1965, equivalent to almost 4% of GDP.
This included not only direct damages (such as property losses and losses from violent crimes), but also public spending on policing, legal proceedings, imprisonment, and private expenses for security, insurance, and protection.
That is to say, crime, besides being an individual's choice, is also a huge cost to the community.
Another central point of the research is that the severity of the punishment (such as increased sentences) has a limited effect on the criminal's decision.
According to Becker, what really matters is the probability of punishment. In other words, crime is more effectively combated when the risk of being caught is high, not necessarily when the sentence is long.
This approach pioneered the field known as Economic Analysis of Crime, influencing public policies, empirical studies, and penal reforms around the world.
And even today, as you may realize, your questions continue to challenge the system: are we investing correctly to deter those who believe that crime "pays"?
Prisons are full, crimes are still ongoing: where is the mistake?
Brazil imprisons a lot of people... but does it imprison them well?
This is the question that few dare to ask, and that all public managers should answer.
Our prison system is overcrowded, disorganized, and dominated by gangs.
Almost half of the prisoners are serving time for crimes such as theft, drug trafficking, or illegal possession of weapons—conduct that, in many cases, could be addressed with less costly and more effective alternative penalties.
But instead of defusing the bomb, we continue feeding the system with more people and less strategy.
Meanwhile, the numbers are alarming. According to IPEA, violence costs Brazil about 6% of its GDP, an economic impact greater than that of many structural reforms.
Moreover, 62% of deaths in Brazilian prisons are caused by disease, according to a survey released by Rádio USP.
In the midst of this collapse, some are proposing a different path, and it already exists.
The APAC model, for example, has shown that it is possible to punish responsibly, rehabilitate with dignity, and spend less while achieving greater results.
In the words of Minister Rogério Schietti Cruz (STJ), the goal there is not to soften penalties, but to make them truly transformative. Lower recidivism, lower costs, greater efficiency.
It's about breaking the taboo. Prison can't just be about revenge; it has to be an intelligent public policy.
This is the warning issued by Tiago Ivo Odon, PhD in sociology and author of one of the most insightful studies on the subject ( Public Security and Economic Analysis of Crime , RIL/2018).
For him, penal efficiency is not measured by the number of people behind bars, but rather by the State's ability to prevent, deter, and reintegrate.
In the MBA in Strategic Management in Public and Private Security at IDP , you will explore exactly this new perspective.
The Public Security and Economic Analysis of Crime course delves deeper into this approach, linking theory and practice with the support of a renowned faculty.
Furthermore, it integrates themes such as Urban Planning and Safe Cities, Crime Mapping, Risk Management, Organized Crime, and Strategic Intelligence, forming a complete path for those who want to move beyond common sense and lead with knowledge, evidence, and impact.
And what is the role of the private sector?
Security is not, and never has been, the exclusive responsibility of the State.
With over 700 registered security guards in Brazil, the private security sector already surpasses the number of personnel in the public police forces.
This is a growing market, highly sensitive to regulatory, reputational, and operational risks.
In this context, companies that operate in asset protection, cash-in-transit, armed escort, or electronic monitoring need to operate with intelligence, planning, and compliance.
Ultimately, spending poorly on security puts assets, contracts, and reputation at risk.
Private security today faces complex challenges:
- How to structure effective protocols for collecting and analyzing sensitive data?
- How can the company's operations be aligned with the current regulatory framework, which imposes specific requirements regarding training, controls, armament, and performance?
- How can you prevent poorly managed outsourcing from exposing your organization to labor, criminal, or ethical risks?
That is why the MBA in Strategic Management in Public and Private Security at IDP was designed to meet the needs not only of public managers, but also executives, operational directors, and compliance officers in the private sector.
The course curriculum covers fundamental topics such as:
- Regulatory Framework for Private Security, to understand the legal limits and opportunities for business activity;
- Compliance in the Private Sector, focused on creating internal policies for integrity, risk prevention, and compliance with specific legislation;
- Intelligence Gathering and Analysis, applicable to both crisis management and threat anticipation and evidence-based decision making.
These contents complement a cross-cutting approach to governance, ethics, and strategy, ideal for those who wish to lead complex operations in shopping centers, airports, banks, large-scale events, or logistics sectors.
These are areas where security efficiency can determine the continuity or failure of a business.
And that is exactly what IDP offers.
Efficiency as a commitment to results.
Crime in Brazil represents not only a public order problem, but also an immense economic and social cost.
Ineffective penal practices, such as mass incarceration without strategy or criteria, burden the State, disorganize the prison system, and fail to deliver the most basic result expected of a criminal policy: the sustainable reduction of violence.
In this scenario, what becomes necessary is to rethink priorities and methods, and that is precisely what the Economic Analysis of Crime proposes.
In the private sector, the challenge is similar. Companies operating in the security field, whether in cash transport, access control, or property surveillance, need to operate with technical rigor, risk analysis, and regulatory compliance.
The logic of efficiency also applies here, so spending poorly on security means compromising results, contracts, and reputations.
It is in this context that the MBA in Strategic Management in Public and Private Security from IDP stands out, a course that combines theoretical depth and practical application, aimed at training leaders prepared to face the contemporary challenges of security with competence, evidence, and responsibility.
With subjects such as Public Security and Economic Analysis of Crime , Risk Mapping and Management , Compliance in the Private Sector , and Urban Planning and Safe Cities , the program offers comprehensive training for those who wish to work with real impact, whether in the public sector or in the specialized market.
If you are looking for a solid education, with nationally renowned professors and content aligned with the contemporary challenges of security, enroll now in the IDP MBA program and start leading with strategy, knowledge, and responsibility.
Want to delve deeper into the topic? Check out some recommended reading:
Public Security and Economic Analysis of Crime – Tiago Ivo Odon
Economic and Social Efficiency and Criminal Law – Everton Gonçalves and Joana Stelzer
The effects of education on crime – Daniel Cerqueira and Rodrigo Moura (IPEA)
