Income Variables and the Measures of Gains from Crime

The empirical literature on the economic analysis of crime suffers from the lack of theoretical underpinnings in using various income variables to proxy expected net gains from crime. As a result, the empirical findings are often mixed or contradictory to one another. This note provides a theoretical argument that relates the net expected gains from crime to a measure of income inequality (Gini coefficient) and the mean income of a society, thereby clarifying the confusions which exist in current criminometric studies.CRLF 1998.16.html: abstract Testing for linearity in time series models has been an active area of research [see Granger and Terasvirta (1993), Tong (1991)]. The authors consider a test for linearity against a particular regime switching model known as the smooth transition autoregressive (STAR) model.