Wednesday, May 21, 2008

Self-Interest Rules

The Justice Secretary as a wild youth

This morning brings a report from academics at Kings College telling us that Labour's flagship programme to cut youth crime has flopped. Despite costing us £650m pa, it has had zilch effect on offending rates.

Progressive Consensus's Mark Easton (aka the BBC's Home Affairs Editor) tells us that it's failed because "we lock up too many children"- far more than enlightened countries like Finland. If instead we spent the £280m pa that costs on social work, then everything would be so much better (in reality of course - as Shadow Justice Minister Nick Herbert pointed out on Today - Finland doesn't need to lock up so many teenage yobs because it has much less crime than us).

BOM readers are only too familiar with our plague of youth crime. Here are a few nuggets from the recent record:

  • Recorded youth crime increasing - between 2003 and 2006 (most recent figures), total offences rose from 184,474 to 222,750 in 2006 (up 21%).
  • Violent youth crime increasing - between 2003 and 2007, the number of under-18s convicted or cautioned over violent offences rose from 17,590 to 24,102, up 37%.
  • Robberies soaring -up 43% over the same period.
Shockingly, the biggest increases in youth crime have not been in those dark deprived inner city melting pots, but in rural areas, once a haven of calm and relative security. Sunny Sussex by the Sea saw "notifiable" (ie serious) offences by persistent young offenders climb by a staggering 242% during Labour's first decade.

So what to do?

As it happens, last evening Tyler attended a panel discussion at the LSE debating Why Economics Matter. Chaired by Mr TT, the panel included two eminent academic economists and two economic journalists (including the outstanding Martin Wolf).

Needless to say, the panel and the entire audience were fully agreed that economics does matter - oh, yes - but the question is why?

A range of different ideas were kicked around, but Wolf put his finger on it right at the start - economics matters because it shows us how self-interest drives our lives and can underpin stable and mutually beneficial relationships between us all. Sure, there's loads of other stuff - like how the invisible hand of markets is much better at allocating scarce resources than central planning - and loads of complications - like how we may not always be able to identify our own rational self-interest (see behavioural economics or game theory). But in essence, self-interest rules.

The academics on panel also talked proudly of how, armed with that idea and a few other tools, economics is gradually "colonising" vast swathes of the other social sciences, from the study of family relationships to, yes, criminology (we can only imagine how such talk goes down with people like Anthony Third Way Giddens in the Senior Common Room of the LSE).

What economics brings to the table is this: in almost any field you can think of, if you want to change behaviour, you have to change individual incentives. While it might be nice to re-engineer someone's internal cognitive wiring, in most respects, we don't have a clue how to do it. Incentives are the key.

Which of course brings us straight back to teenage yobs. None of us like the idea of locking teenagers up. All of us would prefer we had Finnish levels of crime. But we don't.

So what else are we going to do? Clearly we need real zero tolerance policing soonest (a good start by Boris on that London bus). But beyond that, we can have zero confidence in our hopeless £1bn pa Probation Service to reshape behaviour.

And incentives? As things stand, the chances of a young offender being locked up are small: we lock up less than 5% of the c200,000 dealt with every year, and there are only about 3,500 inside at any one time. That doesn't sound much of a disincentive to crime.

What's that? Many of these hopeless dysfunctional kids are from hopeless dysfunctional families so couldn't manage their own behaviour even if they wanted to?

Two things. First, if they're that incontinent, it's not safe to have them walking among us. And second, we clearly need to remove the incentives for such families to have kids in the first place (see previous blogs).

PS Talking of non-enforced laws (ie the opposite of zero tolerance), Tyler was very struck last night by a young lady gobbling a chicken tikka. She was sitting in the LSE's Old Theatre right under a big sign which said "No food or drink permitted in the Old Theatre". Nobody said a word. It's a slippery slope...

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