University of Wisconsin - Madison . . . Institute for Researchon Poverty Discussion Papers

Crime supply functions are reestimated in this paper using data corrected for victim underreporting. It is found in both a meanvariance specification and a conventional crime supply function which includes measures of the offender's gains and losses involved in property crimes that certainty and severity of punishment still deter. When correction for underreporting is made, the effects on the rates of robbery, burglary, larceny and auto theft of increases in prison admission rates and prison sentence lengths remain negative. This seeming support for the "deterrence hypothesis" must be balanced against the strong evidence that improved legitimate opportunities have a negative effect on crime. Use of improved crime data and a more intuitive economic specification of the offense supply function leads to the conclusion that higher income is a better deterrent to some crimes ·than increased punishment.