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  5. Breaking Bad: How Health Shocks Prompt Crime

American Economic Journal:
Applied Economics

ISSN 1945-7782 (Print) | ISSN 1945-7790 (Online)

Breaking Bad: How Health Shocks Prompt Crime

  • Steffen Andersen
  • Elin Colmsjö
  • Gianpaolo Parise
  • Kim Peijnenburg
American Economic Journal: Applied Economics (Forthcoming)

Abstract

Exploiting plausibly exogenous variations in the timing of cancer diagnoses, we establish that health shocks elicit a large and persistent increase in the probability of committing a crime. This effect materializes in a substantial rise in both first crimes and re-offenses. We uncover evidence for two mechanisms. First, an economic motive leads individuals to compensate the loss of legal revenues with illegal earnings. Second, cancer patients face lower expected cost of punishment through a lower survival probability. Welfare programs that alleviate the economic repercussions of health shocks are effective at mitigating the ensuing negative externality on society.

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