Abstract

Evidence on the deterrent effect of capital punishment is important for many states that are currently reconsidering their position on the issue. We examine the deterrent hypothesis by using county-level, postmoratorium panel data and a system of simultaneous equations. The procedure we employ overcomes common aggregation problems, eliminates the bias arising from unobserved heterogeneity, and provides evidence relevant for current conditions. Our results suggest that capital punishment has a strong deterrent effect; each execution results, on average, in eighteen fewer murders—with a margin of error of plus or minus ten. Tests show that results are not driven by tougher sentencing laws and are robust to many alternative specifications.

We gratefully acknowledge helpful discussions with Issac Ehrlich and comments by Badi Baltagi, Robert Chirinko, Keith Hylton, David Mustard, George Shepherd, and participants in the 1999 Law and Economics Association Meetings, 2000 American Economics Association Meetings, and workshops at Emory University, Georgia State University, Northwestern University, and Purdue University. We are also indebted to an anonymous referee for valuable suggestions. The usual disclaimer applies.