The Effect of Education on Crime: Evidence from Prison Inmates, Arrests, and Self-Reports

Headnote

We estimate the effect of education on participation in criminal activity using changes in state compulsory schooling laws over time to account for the endogeneity of schooling decisions. Using Census and FBI data, we find that schooling significantly reduces the probability of incarceration and arrest. NLSY data indicate that our results are caused by changes in criminal behavior and not differences in the probability of arrest or incarceration conditional on crime. We estimate that the social savings from crime reduction associated with high school graduation (for men) is about 14-26 percent of the private return. (JEL 12, K42)

Is it possible to reduce crime rates by raising the education of potential criminals? If so, would it be cost effective with respect to other crime prevention measures? Despite the enormous policy implications, little is known about the relationship between schooling and criminal behavior.

The motivation for these questions is not limited to the obvious policy implications for crime prevention. Estimating the effect of education on criminal activity may shed some light on the magnitude of the social return to education. Economists interested in the benefits of schooling have traditionally focused on the private return to education. However, researchers have recently started to investigate whether schooling generates benefits beyond the private returns received by individuals. In particular, a number of studies attempt to determine whether the schooling of one worker raises the productivity and earnings of other workers around him. [For example, see James Heckman and Peter Klenow (1999), Daron Acemoglu and Joshua Angrist (2000), and Moretti (2004a, b).] Yet, little research has been undertaken to evaluate the importance of other types of external benefits of education, such as its potential effects on crime.1

Crime is a negative externality with enormous social costs. If education reduces crime, then schooling will have social benefits that are not taken into account by individuals. In this case, the social return to education may exceed the private return. Given the large social costs of crime, even small reductions in crime associated with education may be economically important.

There are a number of reasons to believe that education will affect subsequent crime. First, schooling increases the returns to legitimate work, raising the opportunity costs of illicit behavior.2 Additionally, punishment for crime...