Prison Terms for Financial Fraud?

My econ dept colleague Joseph Stiglitz suggests that financial fraudsters be sent to prison. He points out that the usual penalty–million-dollar fines–just isn’t enough for crimes whose rewards can be in the hundreds of millions of dollars.

That all makes sense, but why do the options have to be:

  1. No punishment
  2. A fine with little punishment or deterrent value
  3. Prison.

What’s the point of putting nonviolent criminals in prison? As I’ve said before, I’d prefer if the government just took all these convicted thieves’ assets along with 95% of their salary for several years, made them do community service (sorting bottles and cans at the local dump, perhaps; a financier should be good at this sort of thing, no?), etc. If restriction of personal freedom is judged be part of the sentence, they could be given some sort of electronic tag that would send a message to the police if you are ever more than 3 miles from your home. And a curfew so you have to stay home between the hours of 7pm and 7am. Also take away internet access and require that you live in a 200-square-foot apartment in a grungy neighborhood. And so forth. But no need to bill the taxpayers for the cost of prison.

Stiglitz writes:

When you say the Pledge of Allegiance you say, with “justice for all.” People aren’t sure that we have justice for all. Somebody is caught for a minor drug offense, they are sent to prison for a very long time. And yet, these so-called white-collar crimes, which are not victimless, almost none of these guys, almost none of them, go to prison.

To me, though, this misses the point. Why send minor drug offenders to prison for a very long time? Instead, why not just equip them with some sort of recorder/transmitter that has to be always on. If they can do all their drug deals in silence, then, really, how much trouble are they going to be causing?

Readers with more background in criminology than I will be able to poke holes in my proposals, I’m sure.

P.S. to the impatient readers out there: Yeah, yeah, I have some statistics items on deck. They’ll appear at the approximate rate of one a day.

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About Andrew Gelman 26 Articles

Affiliation: Columbia University

Andrew Gelman is a professor of statistics and political science and director of the Applied Statistics Center at Columbia University. He has received the Outstanding Statistical Application award from the American Statistical Association, the award for best article published in the American Political Science Review, and the Council of Presidents of Statistical Societies award for outstanding contributions by a person under the age of 40.

His books include Bayesian Data Analysis (with John Carlin, Hal Stern, and Don Rubin), Teaching Statistics: A Bag of Tricks (with Deb Nolan), Data Analysis Using Regression and Multilevel/Hierarchical Models (with Jennifer Hill), and, most recently, Red State, Blue State, Rich State, Poor State: Why Americans Vote the Way They Do (with David Park, Boris Shor, Joe Bafumi, and Jeronimo Cortina).

Andrew has done research on a wide range of topics, including: why it is rational to vote; why campaign polls are so variable when elections are so predictable; why redistricting is good for democracy; reversals of death sentences; police stops in New York City, the statistical challenges of estimating small effects; the probability that your vote will be decisive; seats and votes in Congress; social network structure; arsenic in Bangladesh; radon in your basement; toxicology; medical imaging; and methods in surveys, experimental design, statistical inference, computation, and graphics.

Visit: Andrew Gelman's Website

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