Econometric studies of crime have typically assumed that crime rates and sanction levels
are determined simultaneously. and to achieve identification they have assumed that
particular exogenous variables affect sanction levels but not crime rates. In this article it is
suggested that individuals'decisions on whether to participate in criminal activity depend
on perceived sanction levels that depend in turn on sanction levels realized in past periods.
With decisions made in this manner, crime rates and sanction levels are not determined
simultaneously, and the identification problem in its usual form does not arise. Our
econometric results are consistent with this view; arrest and imprisonment sanctions have
little contemporaneous effect on burglary, larceny, and robbery rates. Lagged effects,
although greater than contemporaneous effects, are statistically significant only in the case
of robbery.
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