Marco Vannini

Estimating a crime equation in the presence of organized crime: Evidence from Italy

We estimate a crime equation using a panel dataset of Italian regions for the period 1980 to 1989. Four different crimes are considered: murder, theft, robbery, and fraud. To take account of the presence of criminal organizations—a salient feature of the Italian context and a relevant factor usually disregarded by the empirical literature—we exploit the panel structure with unobservable individual components. Our results suggest that: (i) the probability of punishment is relatively more effective than both the severity of punishment and the efficiency of police authority in deterring crime; (ii) among the variables representing the opportunity costs of participating in illegal activities, the rate of unemployment, the value of public works started by government, and the proportion of people employed in the service sector have a significant effect; (iii) for three types of crime the regional unobservable component is correlated with the regressors; (iv) spillovers from drug consumption to theft are substantial; and (v) with the exception of fraud, the results are in contrast with the predictions of the standard economic model of crime.

Counting the cost of crime in Italy

We gauge the cost of crime in Italy by concentrating on a subset of offences covering about 64% of total recorded crimes in the year 2006. Following the breakdown of costs put forward by Brand and Price, we focus on the costs in anticipation, as a consequence, and in response to a specific offence. The estimated total social cost is more than €38 billion, which amounts to about 2.6% of Italys GDP. To show the usefulness of these measures, we borrow the elasticity estimates from recent studies concerning the determinants of crime in Italy and calculate the cost associated with the surge in crime fuelled by unemployment and pardons. Indeed, in both cases such costs are substantial, implying that they should no longer be skipped when assessing the relative desirability of public policies towards crime.

Bargaining in the shadow of arbitration

Arbitration, as an alternative to litigation for contract disputes, reduces costs and time. While it has frequently been thought of as a substitute to pretrial bargaining and litigation, in fact, parties may be able to reach a settlement privately while engaged in the arbitration process. Consequently, the institutional design may influence the bargaining. We develop a theoretical model of pre-arbitration bargaining that is able to identify the impact of the institutional features on its success. A detailed data set from arbitration proceedings in Italy is analyzed. The exogenous heterogeneity in the composition of the panel of arbitrators allows us to illustrate its effect on bargaining. We show that the number of arbitrators used interacts with their experience and independence to reduce uncertainty and facilitate settlement.

Evidence of Marginal Deterrence: Kidnapping and Murder in Italy

Empirical evidence of the marginal deterrent effect is provided. Exploring a data set of kidnapping crimes in Italy between 1960 and 2012, changes in Italian policy regarding sanctions for kidnapping and their associated impact on murders is considered. Deaths associated with kidnappings increase in prevalence when the kidnapping sanction increased, causing a decrease in the marginal sanction for murder. Death rates reversed when enhanced sanctions for murder were later introduced.

Understanding Ransom Kidnappings and Their Duration

Abstract What factors drive the length of a kidnapping experience? A theoretical model is developed to conduct comparative statics. A unique data set covering all kidnappings for ransom in Sardinia between 1960 and 2010 is analyzed. Factors related to the ability to pay and cost of abduction matter. Policies aimed at deterring kidnapping have mixed effects on its duration.

Bargaining in the Shadow of Arbitration

Arbitration, as an alternative to litigation for contract disputes, reduces costs and time. While it has frequently been thought of as a substitute to pretrial bargaining and litigation, in fact, parties may be able to reach a settlement privately while engaged in the arbitration process. Consequently, the institutional design of the arbitration may influence the bargaining. We develop a theoretical model of pre-arbitration bargaining that is able to identify the impact of the institutional features on its success. A detailed data set from arbitration proceedings in Italy is analyzed. The exogenous heterogeneity in the composition of the panel of arbitrators allows us to illustrate its effect on bargaining. We show that the number of arbitrators used interacts with their experience and independence to reduce uncertainty and facilitate settlement.

Rational expectations in second moments, the J-curve, and the Harrod effect

The plausibility of the Harrod effect under a flexible exchange rate regime is examined using the model in Black (1985), opportunely modified to include J-curve effects. It is shown that at least in one of the two polar cases considered the existence of the Harrod effect is confirmed.