More freakonomics

Here's a strong contender for the best sentence written in economic research this year:

Repressing minor reminders of mortality is always beneficial: it results in a first-order reduction in fear, but only a second order utility loss from regular consumption.

It's from Wojciech Kopczuk and Joel Slemrod's paper, Denial of death and economic behavior. They show that our denial of death can lead us to save too much. That's a great corrective to the self-serving tosh of the pension fund industry which says we're saving too little.  Or at least it would be if it weren't offset by another  mechanism - which is that people who anticipate denying their mortality as they get older save too little, in anticipation of saving too much in later life.
This is not the only NBER paper this week to develop Freakonomics. There's also   "Crime, punishment and myopia" (pdf) by  David S Lee and Justin McCrary.  They've conducted a natural experiment to see whether longer prison sentences deter crime.
Over-18s are treated as adults and get longer sentences than under-18s who commit the same crime. So, they say, you'd expect criminality to fall once people pass their 18th birthday, because - at the margin and ceteris paribus- the offence that was worth the risk when you were 17 is no longer worth it when you are 18.
However, they found that the fall in criminality after peoples' 18th birthday was tiny. This suggests the price elasticity of the demand to commit crime is low. Which means, they say, that "lengthening periods of incarceration has limited value as a deterrent."
There is a case for longer prison sentences. But it's (partly) that the social costs of so-called minor crimes are high, rather than that prison is a deterrent.

Comments

[Angry Economist]

Prison - depends whether its a punishment, rehabilitation or its meant to keep habitual criminals off the streets, doesn't it?

[Rob Read]

People ARE saving far too little. Or perhaps they are saving far too much of their wealth in the hope that their unproductive house will save them from retirement poverty.

Unlikely I say.