ABSTRACT
This chapter examines how information about the extent of underreporting of crime can be incorporated into a generic economic model of criminal activity and analyses the robustness of that model's conclusions in the presence of measurement error. It addresses only one of the criticisms which criminologists level against the use of official criminal statistics. This is the argument that criminal statistics can tell us nothing useful about the incidence of crime. It is generally accepted that official statistics of crime measure only a proportion of all crimes that take place each year. By comparison, economists who have ventured into the study of crime have used recorded crime statistics as if they were perfectly accurate indicators of the extent of criminal activity. The chapter presents a highly simplified analysis of the impact of measurement error in an economic model of crime.
