Hidden Order the Economics of Every Day Life

¶ … Hidden Order: The Economics of Everyday Life" by David Friedman. The paper will discuss various articles that have been written to elaborate various points from the book.

The Hidden Order: Economics of Everyday Life

David Friedman's book "The Hidden Order: Economics of Everyday Life" is a classic read, it highlights all the possible encounters a person can have in the field of economics. He has tried to highlight the problems and rational of everyday life that are encountered in the field of economics. His books cover various parts and aspects of everyday life of the general population.

The Hidden Order: Economics of Everyday Life

Friedman has covered various topics in his book; they include topics like, price, value and cost of a simple economy, relations between employers and employees in the real world, implementation of economics in everyday life with emphasis on the criminal activities that take lace in the economist's world.

Many economists have written many articles and have provided with analytical details of the works of Friedman. These article vary from giving extra tips on Friedman's work or act as criticism to his work. In the chapter of Implementation and application of economic theories, David Friedman has given a detailed analysis of how crimes take place in the world of economics. Economics applies to illegal markets as well as to legal ones. When one input to production is eliminated, substitutes become more valuable. Since participants in illegal markets cannot enforce their contracts in court, substitutes such as reputation become more important. The traditional definition of an honest politician is one who stays bought.

The Concept of Law

Though commentators often characterize economic analysis of law as providing a comprehensive theory of law, its narrower ambitions become apparent when one realizes that economic analysis of law has not explicitly addressed the question "What is law?." Indeed, economic analyses of law generally presuppose a concept of law in that the law is uncontroversially known to all actors.

One might extract two quite different accounts of the concept of law from the practice of economic analysts. On one interpretation, economic analysis of law relies on a straightforward theory of legal positivism. On the second interpretation, at which the end of the last section hinted, economic analysis of law assimilates the analysis of law to the analysis of social phenomena generally; it postulates, then, that there is no analytically useful concept of law. A wide range of criminal justice issues have been analyzed in literally thousands of published and unpublished studies using the tools of economic analysis, particularly in the U.S.A.

Behavioral Studies

These are studies that focus on a particular theory of criminal behaviour: the rational-choice approach (whereby criminals are assumed to offend because they perceive the benefits, to them personally, of offending outweigh the costs) and to its application to criminal justice policy. It is arguable whether these fall within the field of economics per se or into related fields, such as psychology or criminology. Nonetheless a number of studies falling squarely within this category have been published in leading economics journals and are frequently cited as examples of the wide applicability of the "rational economic man" concept. An example of this approach locally is Cathy Buchanan and Peter Hartley's Controlling Crime in New Zealand (1996). This was commissioned by the New Zealand Business Roundtable and attracted considerable publicity, although much of it was adverse. The rational-choice approach can, of course, also be incorporated in work dealing with cost-efficient or "optimal" (as determined by cost: benefit analysis) responses to crime. However, the same can be said of a wide range of psychological/criminological and other insights.

Unit Monetary Costs of Crimes

Another key issue to be addressed in the design of a model methodology for economic analysis is the development of unit monetary costs of the major property and violent crimes (e.g., burglary, robbery, child abuse, sexual assault). Without unit costs of the different crime types that will be measured in evaluations of crime prevention programs, there will be no way to value crimes saved or prevented. For the purpose of comparing different crime prevention programs, these unit costs will need to be uniform.

In the U.S., Miler, Cohen, and Wiersema (1996) developed estimates of the unit monetary costs of the major property and violent crimes, based on average losses to crime victims. Their estimates include tangible or direct losses due to property damage and loss, medical care (e.g., treatment, emergency transport), mental health care (e.g., services provided by psychiatrists, psychologists, and social workers), victim and social services (e.g., shelters), productivity (e.g., lost wages), and police services (i.e., initial response and follow-up investigation) (Miller et al., 1996, pp. 10-14). Intangible or non-out-of-pocket losses such as pain, suffering, and lost quality of life, were also included in their estimates. Their estimates did not, however, include the full costs associated with society's response to victimization; for example, expenses to courts and corrections agencies for processing and punishing offenders and costs incurred by the public for private security such as alarm systems were not included.

What categories of losses to include or not to include in the development of estimates of unit monetary costs of crimes will depend on the perspective (e.g., government/taxpayer, crime victim) to be adopted in the economic analysis? One of the more controversial issues of economic analysis is the inclusion of intangible victim costs. This is at least in part because of the large estimates that have been produced for victim costs (Cohen, 1988, 1998; Miller et al., 1993, 1996; Cohen, Miller, & Rossman, 1994), but especially because of the methodology used (Zimring & Hawkins, 1995, Chapt. 7). In developing estimates of the costs of different crimes, it will be important to weigh the evidence on the opposing sides of this issue.

It is suggested that the work programme undertaken over the next 12-24 months looking at cost of crime and related issues have the following foci:

a) Research into the effectiveness of various strategies in reducing offending (including (a) a range of "increasing imprisonment" options, (b) selected programmes in the community for offenders, young people "at risk" and/or victims and potential victims, - increasing police numbers and/or changing policing policies and (d) situational crime prevention measures);