NCJ Number
86598
Date Published
1981
Length
149 pages
Annotation
This research measures the general deterrent effect of the risk of conviction and severity of punishment on the incidence of Aid to Families with Dependent Children (AFDC) fraud in Maryland. It determines the impact of law enforcement expenditures and various socioeconomic factors on fraud rates.
Abstract
Applying general economic theory of crime deterrence to the study of fraud, the study finds that the expected cost of punishment produces significant deterrent effect. However, the impact of the size of the defrauded AFDC grant and the unemployment rate outweighed the deterrent effect and expected earnings from employment. Also, increases in fraud and crime rates, other than AFDC fraud, reduce the magnitude of the deterrent effect of the cost of punishment. On the other hand, increases in investigative expenditures and productivity of criminal justice personnel augmented the effect of punishment costs. Moreover, investigative resources are allocated in an incremental manner and are insensitive to prevailing rates and social losses from fraud. Overall, the expected costs of punishment imposed on potential AFDC cheaters does not lead to fraud control and prevention. This will only be achieved when the expected cost of punishment at least equals the expected illegal gains from fraud. Strategies to achieve this goal are suggested. Study data and over 60 references are appended, and footnotes are included. (Author abstract modified)