Thursday, August 6, 2009

Efficiency of Crime

I have a terrible habit of agreeing that bad people are bad, but for the wrong reasons. An example I thought of a while back was Enron. Generally I see two lines of criticism: the illegal and the economically stupid. I've seen no combination of the two: the economics of the illegal. Numbers vary, but they cost California something in the billions. How much did they make from that? That is the efficiency. I'll go ahead and pretend to be brilliant by defining the efficiency of a crime as the ratio of money gained to money stolen or otherwise deprived from a victim.

A high efficiency crime is theft of money. Sneak into a house, open (don't break) a window, and grab a few dollars. The money gained is the same as the money lost.

Lower efficiency would be stealing an object, perhaps jewelry. Selling it will give less than the original cost of it. The money gained is lower than the money lost.

Even lower efficiency is seen when property is damaged. This results in more loss with no gain.

In popular media the perceived brilliance of a plan is often related to the amount of money which is stolen. Enron looks like a smart crime because it got so much money. A guy that steals a wallet is shown as a bum. But the latter is much more efficient, getting what he's after with less proportional damage to the victim. For all the plotting and scheming of the folks at Enron, they wasted a lot of time being fancy when they could have been direct.

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