The issue of whether and how to justify penalty enhancements for hate crimes against members of disfavored groups has attracted widespread attention. Harel and Parchomovsky (1999) justify penalty enhancements on egalitarian grounds, arguing that such crimes lead to the disproportionate victimization of minorities. However, within an economic framework, no distinctive harm is caused by disparate victimization per se. This paper addresses this issue by extending the standard economic model of crime in two ways. First, it introduces potential offenders' beliefs about the characteristics of potential victims as a factor that may affect the net benefits from crime (or, more generally, from hostile acts). Second, based on psychological evidence, it assumes that individuals are subject to a just world bias in inference - i.e., a tendency to attribute disproportionate victimization to negative characteristics of the victimized group, rather than to the hate-motivated preferences of offenders. In a simple two-period setting, we show that disproportionate victimization of the disfavored group in the first period can lead to additional crime against that group in the second period. The reason is that potential offenders subject to the just world bias infer that the cause of disproportionate victimization is not hate motivation but the victims' negative characteristics, and this inference raises the net benefits of crime against that group. Our main result is that penalty enhancements can reduce the social harm due to these extra crimes (or, more generally, to socially costly acts of discrimination). We also consider the implications of the just world bias for a more general welfare analysis of optimal enforcement policy.


Law and Economics

Date of this Version

April 2006