Incentives matter: crime file

There is a new NBER working paper out by Radha Iyengar on three-strikes-and-you're-out sentencing in California. Iyengar's paper, I'd rather be Hanged for a Sheep than a Lamb: The Unintended Consequences of 'Three-Strikes' Laws, shows that incentives work even for criminals but in some cases not in the intended ways:

I estimate that Three Strikes reduced participation in criminal activity by 20 percent for second-strike eligible offenders and a 28 percent decline for third-strike eligible offenders. However, I find two unintended consequences of the law. First, because Three Strikes flattened the penalty gradient with respect to severity, criminals were more likely to commit more violent crimes. Among third-strike eligible offenders, the probability of committing violent crimes increased by 9 percentage points. Second, because California's law was more harsh than the laws of other nearby states, Three Strikes had a "beggar-thy-neighbor" effect increasing the migration of criminals with second and third-strike eligibility to commit crimes in neighboring states.