May 2014

IZA DP No. 8168: Time Preferences and Criminal Behavior

published as 'Time Discounting and Criminal Behavior' in Proceedings of the National Academy of Science (PNAS), 2016, 133, 22

One main motive behind lengthy prison terms for serious crime is to deter potential offenders from engaging in crime. Yet, economic theory predicts that the scope for punishment as acting as a deterrent depends on how much individuals discount future events when balancing the immediate utility of the crime and the costs of a potential future punishment. If criminals have short time horizons, then it is hard to imagine punishment acting as a key deterrent. This paper provides the first empirical investigation of the link between time preferences and criminal behavior. Our study is made possible by access to a unique Swedish longitudinal dataset that links individual measures of time preferences collected at age 13 to various crime indicators from administrative registers spanning over 18 years. Our results show that high discount rates significantly predict criminal involvement. The magnitude of the relationship is substantial and corresponds to roughly one third of the association between intelligence and crime. Although high discount rates significantly predict the onset of criminal involvement, it is less strongly correlated with crime at the intensive margin. The link is more pronounced for property crime and among males with low intelligence. We also find that part of the association can be explained by high discount rates being associated with lower human capital accumulation.