A case study on the legal regulation of shoplifting in Austria and the “criminal tourism” from the East

Intmtational RtGew of Law and Economics (1992)

12, 4X9-455

A Case Study on the Legal Regulation of Shoplifting in Austria and the “Criminal Tourism” from the East DR. PETER I,EWISCH Department

of Criminal

Law,

University

ofViennu,

Vienna,

Austria

A. The “Criminal Tourism” from the East 1)

The Opening

of the Iron Curtain

After the removal of the iron curtain, hundreds of thousands of tourists from the East exerted their newly acquired freedom by visiting Austria. At this time, in 1989 and 1990, eastern Austria, and mainly Vienna, experienced a dramatic increase in criminal offenses against property. Obviously, an increase in the number of potential offenders increases the absolute number of crimes committed. But more than that, we observed a disproportionately high number of Eastern tourists committing crimes in Austria. Overall, there were two sources of crime from abroad, namely, professional gangs that concentrated on large-scale crimes and “nonprofessional” individual perpetrators, who committed petty offenses against property, mostly shoplifting. The rise in shoplifting, albeit dramatic in 1989190, has to be considered in the light of a steady increase within recent years, to which-doubtlessly-Austrian citizens have much contributed. On the other hand, there is equally no doubt that shoplifting’ was the paradigm criminal offense of our Eastern neighbors in 1990. In the public discussion several commentators claimed that the communist regimes ruined the morals of our Eastern neighbors, and that the Czechs, Hungarians, Poles and Romanians are more inclined toward crimes than we Austrians are. The economic approach to crime allows us to reassess this empirical phenomenon from a different perspective. In applying the framework of rational choice and rational behavior, we can explain the high proportion of shoplifting committed by foreigners without necessarily claiming that they are more crime prone than we are.

I am indebted to Warren their helpful suggestions.

Schwartz,

Anthony

Ogus, Chriztoph

Sickinger.

and an anonymous

refrrce

for

‘For a formal economic treatment of theft and law enforcement, see G. SkoghiCh. Stuart. “An economics analysis of crime rates, punishment, and the social consequences of crime.” (1982) 3X Public Choice 172 and. for an outline of doctrinal questions concerning shoplifting, M. Buqstaller. Der Ladendiebstahl und seine privatr Beklmpfung (1981). 0 1992 Butterworth-Heillemanrl

440

Shoplifting

in Austria and “criminal tourism” from the east

2) The Economic Approach

to Criminal

Law

The economic approach to crime and punishment interprets crimes as an individual’s rational choice among certain alternatives.’ It is a choice of allocating time among legal and illegal activities.” In applying this framework we can identify some key factors that determine a potential offender’s choice to commit a crime or to refrain from it: The opportunity costs of time (e.g., wages, education, unemployment, youth, race), possible gains from committing the act, penalties, the likelihood of conviction, etc. Even if we assume the only relevant difference between, say, Czechoslovakia and Austria, to be the quality of the products displayed in supermarkets, we can predict “criminal tourism” to emerge, as long as the dif-ference in quality between the two countries pays for the low expenses for travelling to Austria.4 Other things being equal, the higher quality of the loot implies higher expected gains for the same activity at the same risk. Second, the opportunity costs of committing a crime were and are certainly lower for people from the East than they are for Austrians. In adopting an economic perspective to crimes, therefore, we assume individual actors to adapt and respond systematically in their behavior to constraints and incentives (and to changes in these relevant incentives). More specifically, this approach asserts that an individual commits a crime when the expected utility of the offense exceeds the expected utility of different options. The expected net utility a criminal derives from committing a crime is the expected utility the wrongdoer will gain by the act minus the expected disutility that stems from punishment. This expected disutility reflects the extent of the actual punishment (when meted out) and the probability of the penalty being imposed on the wrongdoer. A change in either of them will consequently change the expected costs of crime. Thus the economic approach to crime implies that, even if we do not know why people commit crimes, we can predict that a rise in the expected costs of crimes will reduce, other things being equal, the amount of crimes committed.” Two important points merit our attention here. First, to apply such analysis does not require us to assume that the sole task of criminal policy is deterrence. There is no self-evident reason why individuals in society should unilaterally favor deterrence vis a vis conflicting aims. What individuals do, and what we would predict them to do, is to balance goals of deterrence against other values (and goals) that individuals in society share. Second, the adoption of an economic approach to crime and pun-

?5ee e.g., G. Becker, “Crime and punishment: An economic approach,” (1968) 76J.Pol.Econ. 169; 1. Ehrlich, “Participation in illegitimate activities,” (I 973) 3 1 J.Pol.Econ. 52 1; for a moregeneraltreatment D. Pyle, “The economics of crime and law enforcement” (1983): I.. Phillips/H. Votey, “The economics of crime control” (1981); R. Andreano/J. Siegfried. “The economics of crime” (1980). 3P. Burrows and C. Veljanovski emphasire that “theory predicts that individuals will be influenced in their job choices by the net advantages of the jobs, i.e., by the total bundle of their pecuniary and nonpecuniary characteristics. Thus the hypothesis is that the decision to engage in crime will be determined both by the wealth that can be gained and by more intangible characteristicr such as the risk and life-stvle”. See P. Burrows/C. Veljanovski (eds.), “The economic approach to law” (1981). p. 7. 41n addition we have to consider those visitors Travel expenses will qualify as sunk costs here. “See P. Rubin, p. 14.

“The economics

ofcrime”,

who decide

in: R. Andreano/J.

to commit

Siegfried

a crime

only when

(eds.), “The economics

already

in Austria.

of crime”

(1980),

P. LEWISCH

441

does not commit us to some specific normative evaluation of the criminal act as such. Some proponents of the economic approach consider the choice of a potential perpetrator, when assessing the option of committing a crime or to honor the existent laws, as neutral in terms of normative evaluation, comparable to the choice among several soft drinks. Divergent interpretations, which I personally share, urge us to take seriously society’s will, as embodied in the law, to declare a certain act illegal. Hence, when breaking the law the perpetrator commits a wrong. This point draws another feature to our attention. Criminal prohibitions exist because society does not want the prohibited acts to occur. The task, properly conceived, is not only one of reducing criminal acts to a certain (“optimal”) amount, but ultimately to eliminate the occurrence of crimes. It is a conceptually different question whether a society that operates under a general scarcity constraint can ever reach this goal. In a world of scarce means, society can only confine itself to the suppression of some criminal acts, and, in economizing on its resources, it may or may not follow a Becker-like concept of law enforcement. In identifying the two key factors that determine the amount of expected punishment, namely, the actual size of the penalty and the probability of conviction, we can discuss the tradeoff among these factors and, hence, the potential for criminal policies to inhibit the occurrence of crimes. Theory suggests that we can get the same amount of expected punishment by combining either high penalties with low probabilities of conviction or by relying on the inverse combination, namely, low penalties and high probabilities. To illustrate this tradeoff, we can imagine an isocrime curve that mirrors points of equal deterrence, depicted in a graph where we have the probability of conviction on the horizontal axis and the size of the sanction on the vertical axis. These various combinations of probabilities and penalties that yield equal deterrence, however, differ in the amount of costs involved. Since enforcement is costly, especially so for nonmonetary sanctions, institutional settings that combine low probabilities and high penalties are relatively more attractive in terms of costs. Why then apply a combination of low penalties and high probabilities of conviction that does not yield for society anything in terms of additional deterrence? According to this line of economic reasoning, there are prominent scholars who advocate a system of criminal law and its enforcement that combines high penalties and low probabilities.6 Several caveats, however, apply.’ Marginal deterrence problems, the disutility imposed on risk adverse criminals, error costs, etc. The problem of optimal law enforcement exists in various dimensions. Let us discuss here the implications of different penalty schedules in terms of their deterrent effects, assuming the enforcement level as given. a In doing this, we can identify a straightforward relation of penalties and their deterrent effects in terms of costs. For a given enforcement level, stiffer penalties will increase deterrence, and hence, reishment

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Posner,

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tradeoff Block/J.

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of.fines,”

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enforcement

of

law,”

(1970)

78

442

Shoplifting in Austria and “‘criminal tourism” from the east

duce the crime rate and, consequently, the costs of crime in terms of harm being afflicted on victims.” If this were the whole story, we would have a convincing argument for very high penalties. ‘” But we can also identify a second, inverse relation of penalties and costs that reflects the individual’s assessment of the penalty schedule in a potential wrongdoer’s perspective. Every individual will consider the option that he himself at some positive probability might be the wrongdoer and that the sanctions will be incurred. The individual also will take into account costs due to a certain probability of erroneous convictions. Such costs will increase with the harshness of penalties. Hence, this second cost curve illustrates an inverse relation; it will be low when the penalties are lenient and high when penalties are stiff. Principally, we can describe marginal adjustment conditions that allow us to identify an optimal penalty schedule. So far only some of the factors that determine this inverse cost curve have been addressed and we should not so confine our analysis. If the individual considers aspects of .justice, desert, retribution, or if he cares about his peers’ choices to get wrongly sentenced, this second cost curve will equally mirror such attitudes. Such attitudes and evaluations will modify both the curve’s position and its steepness. The more the individual cares about these factors in general, the higher the overall position of the curve will be. If the individual has strong notions ofjustice, he will get increasingly sensitive to harsher penalties (which is mirrored in a steeper curve). Put thus, we will recognize that the steeper the curve is, the lower the preferred level of punishment will be. Such descriptive analysis reveals that the choice of a lower level of punishment, i.e., more lenient penalties, implies higher direct costs (harm) through crimes committed. We have to consider, however, that, since all costs are subjective, this second cost curve reflects only those attitudes and value judgements a certain individual holds. Subjective evaluations of ,justice and retribution will differ throughout the population. All problems familiar from the public choice literature will emerge when it comes to describing the social choice of punishment institutions. In real life settings such punishment institutions are already in operation, and they are framed by (constitutional) rules that embody normative evaluations in the sense described above. Constitutional guarantees ban certain tools of searching out the truth in criminal procedure; others state a rule of proportion between the wrong committed and the penalty that may be carried out against a wrongdoer and grant certain rights to a defendant in a criminal charge. There is no reason to disregard such institutional arrangements in an economic analysis. 3) Institutions and Incentiues Let us address now the legal regulation of shoplifting in Austria in 1989190. Since the expected punishment depends both on probability of punishment, we will predict a high proportion of offenses, if either one (or both) is (are) substantially lower for East than for Austrians. Recognition of this relation alerts us

“I will not discuss

here eventual

difhculties

that stem f~-om a game

‘“This section relies on an insightful, unfortunately unpublished punishments for equal crimes: An economic rationale.”

theoreuc paper

that was in operation the penalty and the foreigners to commit foreigners from the to the need to assess

framework.

by Ch. GoetziW.

Schwartz,

“Unequal

P. LEWISCII

443

the incentive structure embedded in the criminal code that Austrian citizens and foreigners respectively faced when contemplating the option of committing a shoplifting. Larceny constitutes a criminal offense under Austrian law. Our criminal code does not provide a formal decriminalization for petty offenses. Accordingly, shoplifting is considered a criminal act, irrespective of the amount stolen.” Though there is no categoric exemption for petty offenses, the criminal code (§ 42 6StGB) allows the remission of punishment for a specific deed if several requirements are met:i2 First, the offense must be trivial in nature (maximum sanction below three years of imprisonment). Second, the criminal act must entail only negligible consequences, or, if they are substantial, the wrongdoer must compensate for them or at least try to. Third, there must be no preventive need to return a verdict: In other words, punishment must not be required to deter the offender himself from further violations or to discourage others from committing similar acts. Since the application of § 42 StGB, thus, presupposes a lack of preventive goals in the above-mentioned broad sense, it is quite apparent that this provision will cover shoplifting only under very rare circumstances. Moreover, the Supreme Court interprets § 42 in a highly restrictive sense.‘” In several recent decisions the Supreme Court carefully avoided conveying the impression that § 42 would amount to a dr fucto decriminalization of trivial offenses. Nonetheless, the general judicial treatment of shoplifting remains ambiguous. Courts of first instance and attorneys there interpret 9 42 much more widely and tend to apply 9: 42 to shoplifting in an undifferentiated manner, provided only that the harm afflicted (or attempted) is below (roughly) 200 AS. It is not surprising that such inconsistent interpretations have contributed to a still prevailing uncertainty, even among the Austrian population, concerning the actual legal treatment of shoplifting. In principle, the legal framework as just outlined applies equally to citizens and foreigners. Still, there is evidence that Eastern tourists differed substantially in their actual assessment of the institutional framework as compared to Austrians. Fliers that were found in the baggage of foreigners illustrate such misconceptions. They wrongly suggested that shoplifting would not be prosecuted as a criminal offense in Austria, as long as the amount stolen was below $50 (or sometimes $100). Some misconceptions concerning Austrian criminal law were also rooted in the different legal treatment of shoplifting in their home countries. Since in Czechoslovakia and Hungary petty shoplifting constitutes an offense only under administrative penal law, it seems understandable that at least some Eastern tourists supposed similar legal provisions to operate in Austria. However, such misconceptions regarding the Austrian legal provisions do not fully explain the phenomenon of the “criminal tourism. ” The main factor that influenced the choice setting potential shoplifters from abroad faced was the low probability of conviction. We can clarify this point more fully by breaking down the probability of

444

Shoplifting in Au&u

and “criminul tourism” from the east

being finally convicted into several factors (probabilities), namely, into the probability of detection, the probability of identifying the offender, of (if necessary) arresting him and getting him to trial and, once at court, the probability that thejudge will impose a penalty. For shoplifting committed by foreigners, there is no evidence of any substantial difference in the probabilities of detection compared to Austrians. Yet, in 1989/90, there was a dramatic difference in the probability of successful prosecution, once detected. Let us see why. The Austrian criminal procedure provides grounds for arrest that differ according to the severity of the crime. For trivial offenses, subject to the jurisdiction of our lowest criminal courts, they are limited. The only relevant ground of arrest for shoplifting feasible in 1990 required the suspicion of the wrongdoer’s intent to abscond. According to the leading doctrinal interpretation, this covered only cases of genuine escape, but did not provide arrest, if some foreigner continued his journey (as planned) and, thereby, left Austria. So long as this applied to Austrian citizens, no serious problems emerged. An escape for the trivial reason of having committed shoplifting was rare, and, should it have occurred, it was covered by the above-mentioned provision. Conversely, criminal procedure did not provide the legal means of arresting foreign perpetrators if they intended to continue and complete their journey home. This analysis reveals that there was no device at hand to successfully enforce the law if foreign shoplifters were concerned. Once back in their home countries, shoplifters from the East were defucto immune from prosecution. First, in Czechoslovakia and Hungary shoplifting constitutes a criminal offense only if the damage exceeds 320 AS. Even if criminal prosecution in the home countries was feasible, in 1990 a system of exchanging information between Austrian, Czech and Hungarian enforcement agencies that was required to effectively enforce the law hardly existed. Third, trivial cases (such as shoplifting) were not covered by the existing agreements of extradition. Given these enormous difficulties in getting the wrongdoer to trial once he was back in his home country, attorneys in Austria closed the criminal files for such cases. Hence, offenders had no fear of arrest when reentering Austria. Considering the rules in operation in 1990, we perceive that the probability of getting sentenced in Austria for shoplifting for a foreigner from the East was extremely low. This analysis implies that, other things being equal, the expected costs of committing a crime were equally low. Thus, we perceive a dramatic difference in the expected disutility of crimes for Austrians and foreigners, respectively, which allows us to explain with relative ease the high proportion of foreigners committing shoplifting in Austria. 4) The Call for Legal Meusures The dramatic increase in shoplifting in the first half of 1990 caused (understandable) complaints by shopkeepers. Furthermore, it induced the Chamber of Commerce to intervene and to urge immediate legal measures to fight this situation. There is a plausible economic reason for this call for legal protection. Shoplifting provides a good illustration for a double track of crime prevention (and partially enforcement) between public institutions and private efforts. Stores make use of invisible “tags” that activate electronic detectors in the case of attempted shoplifting. However, the prevention of shoplifting is not a store’s ultimate task, to be accom-

P.

445

LEWISCH

plished regardless of costs involved. Here, again, we can isolate two cost factors that affect stores: costs that are inflicted directly by shoplifting (= the harm actually done) and costs that belong to outlays for crime prevention. Even if the shopowner wishes no shoplifting at all to occur, he will not invest in crime prevention that does not pay in terms of overall costs. Hence, he will optimize when marginal ad.justment conditions are met, allowing for some shoplifting to occur. While in the long run enterprises can adapt to the losses of shoplifting, a short-term increase, such as the 1990 shock, substantially affects the enterprises. The Chamber of Commerce called for legislative action, specifically tailored to fight shoplifting by foreigners. The legislature acceded to the request. Since time was short before the legislative summer break, the parliamentary processes were abbreviated. The drafting of the amendment took two days, and there were no formal hearings.‘” 5) Possible Policies for Reform In principle, any reform had to seek to devise means of eliminating the differential advantage of foreigners in terms of expected punishment. In the light of the discussion above, there were two feasible lines of reform: Either to increase the penalties for foreigners dramatically or to increase the probability of conviction. For the latter, there were again two possible options: to enhance the probability of conviction either by reducing legal standards and procedural guarantees,‘” or by providing new and broader powers of arrest. Let us first consider the option of increasing penalties on foreigners. There is some evidence that courts in Vienna tentatively commenced in 1989/90 to discriminate between citizens and foreigners, and to inflict harsher penalties on the latter. Insofar as the application of § 42 StGB was concerned, there was at least some doctrinal basis to justify such differentiation. Yet, for obvious reasons, the criminal provisions limited the ability of the executive branch to discriminate between citizens and foreigners. But why not adopt legislative measures? We might envisage an amendment to the criminal code, imposing higher penalties for foreigners, in order to offset their lower probability of conviction. Such a policy, albeit attractive from a cost perspective, would raise objections in terms of fairness, summarized in the requirement to treat like cases alike. For prominent Law and Economics scholars, such as Posner,‘” no problem of fairness would emerge. Generally, Posner compares the working of a high penalty-low probability criminal policy with the fairness of a lottery. On this view, it does not matter that some get the full penalty and others go scat free, as long as ex ante costs and benefits are equalized among the players. Applied to our policy concern, so long as ex ante the expected disutility of punishment is the same for foreigners and citizens, no one can complain, despite the fact that penalties actually imposed differ systematically.

14As a result

of the rush,

‘The parliamentary and guarantees. ‘%qIra

Il.6 at p.1213.

the interest

record

mdicatea

group

of the judges

that the legislature

was not informed explicitly

intended

either,

with serious

to maintain

conaequen~es.

all existing

standards

Shoplifting

446

in Austria and “criminal tourism” from the east

When assessing the option of differentially higher penalties for foreigners, it seems doubtful whether the fairness of a lottery would suffice to qualify an institutional provision as adequate to solve a particular social problem. Why not offer a convicted offender the choice either to suffer the penalty imposed in the sentence or to engage in a lottery in which the flip of a coin will decide whether a double penalty would be inflicted or he would go free? Fairness is also context dependent. The relevant normative question should be whether we can, within the social group, reach agreement on the specific rule. The answer to this delicate question depends on the normative criterion for evaluation that we are willing to adopt. If the normative standard of evaluation is one of a pure ex ante perspective, there is no potential to judge this reform unfair. Ex ante, citizens and foreigners are treated alike, since there is no difference between these groups in terms of expected punishment. If we apply an ex post perspective, such that actual penalties inflicted on wrongdoers matter, we have to reckon with the fact that different sanctions get imposed for equivalent acts that differ solely in respect of the offender’s nationality. It appears to me that, in the final analysis, we have to rely on the characteristics of our penal institutions. While it is true that in a pluralistic society we might determine the criminal law on the basis of its deterrent function, most systems of criminal law use a retributive device for this task, i.e., a criminal penalty that primarily reflects attributes of the deed it is meant to punish, namely, the harm inflicted and the wrongdoer’s guilt. Within the general framework of such institutions, we would treat identical cases differently if we were to evoke different treatments of shoplifting according to the personal attributes of the wrongdoer. To differentiate sanctions between Austrians and foreigners in order to yield equal deterrence in terms of expected punishment would violate the concept of fairness as embedded in existing legal institutions. Hence, not surprisingly, no legal measures were undertaken to increase the penalties for foreigners. The reform in criminal law took a different path and aimed to increase the probability of conviction of detected offenders. We have to recall here that the low probability of conviction in our case did not result from factual difficulties in observing easily concealed deeds. It concerned problems in bringing the detected offender to trial. Thus, the reform did not require more policemen on patrol, but rather a change in the legal framework. Accordingly, the reform tried to enhance the probability of successful prosecution of arrested foreign shoplifters by amending the criminal procedure. This amendment” was twofold (8 453 StPO). First, a new form of a “speedy trial” was introduced. This trial, of course, would be of little relevance, as long as the detected shoplifter could not be forced to attend the trial. Therefore, the amendment introduced a new ground for arrest that aimed to cover shoplifters who intended to return to their home countries. Under this new clause, travellers who commit a criminal offense in Austria may be arrested if their journey is to be continued However, the amendment permits the arrest of and “impedes criminal prosecution.” travellers only to subject them immediately to a speedy trial and not to impose some disutility (to be locked into a cell) as such. To accomplish this task, the duration of

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P.

LEWISCH

447

arrest is limited to 48 hours. Moreover, the suspect can be no longer held once it becomes clear that this time limit cannot be met. It is obvious that any reform option that seeks to increase the probability of conviction is a costly endeavor. Financial means were required: first, to provide the “infrastructure” to bring this reform into operation, i.e., newly adapted cells, guards, meals, transports, etc.; and, secondly, to cover the costs of secretaries, attorneys, judges, and translators involved in the trials. This point needs some refinement: As long as speedy trials were conducted during weekdays, no serious additional expenses were involved in terms of out-of-pocket costs (apart from the outlays for translators). Trials on weekends, however, required additional finance, including that required to compensate judges required to undertake the additional work involved in speedy trials on weekends. The parliamentary record shows that the additional annual costs were estimated to be about 1 ,OOO,OOOAS. Yet, the deputies did not consider the question of whether the compensation provided in the amendment would work as a sufficient incentive for judges-and secretaries-actually to conduct trials and, if this should not be the case, whether sufficient incentives would require higher costs. It is interesting to see how this new amendment worked out. If we assess the legal reform in terms of an overall perspective, the result is somehow ambiguous. Based on the experience of various interviews that I conducted on this issue, it is my impression that the evaluation of the reform is rather controversial. While the judges tend to consider the amendment itself rather a failure, Ministry officials emphasize that the reform accomplished the task it was designed for, namely, to reduce shoplifting by foreigners in Austria. Also the Chamber of Commerce considers the reform as a useful step in reducing the shoplifting tourism from abroad. Let us begin by discussing the specifics of the amendment, namely, a speedy trial and the new grounds for arrest. The success of the reform varies geographically. It was more successful in the countryside and in small towns than in Vienna. And, whereas the reform overall turned out to be successful during the week, it collapsed on weekends (again, especially in Vienna). Though compensation was provided for weekend trials, it turned out to be much too low. For judges the newly provided compensation ” did not provide any serious incentive to conduct trials on weekends, and the compensation provided for secretaries turned out to be equally inadequate. Since most court secretaries are commuters from the region around Vienna, a weekend trial was extremely troublesome for them. Consequently, hardly any trials were conducted on weekends. Given such limitations, the 48 hour requirement was impossible to meet, if the shoplifting was committed on late Friday afternoon (and difficult to meet for Saturday morning offenses). These problems contributed to a partial breakdown of the reform insofar as weekends were concerned. To evaluate the contribution of the reform to calm the dramatic situation of mid1990 is a difficult task. These difficulties stem from the fact that social issues are highly complex and a precise assessment of all variables can hardly be made. Yet it is quite obvious that the amendment provided a legal remedy for successful criminal prosecution, thereby increasing dramatically the probability of conviction of foreign shoplifters in Austria. In addition, the amendment in operation emphasized that Austria took shoplifting seriously and helped to reduce misunderstandings concern-

448

Shoplifting in Austria and “criminal tourism” from the east

ing the criminal nature of shoplifting in Austria. Furthermore, since 1990 collaboration between our Eastern neighbor countries and Austrian officials in handling shoplifting has developed. There are treaties of extradition in operation now that reduce the possibility of professional shoplifters escaping penalties. Considered overall, the reform may be judged a three-fourths or two-thirds success. This development illuminates the tradeoff of costs and the probability of conviction. If a society wants to enhance the expected disutility of crimes without raising penalties, I9 financial outlays are necessarily involved. In a community that operates under a general scarcity constraint, people must be willing to bear the costs of financing a system of adequate incentives. B. Legal Treatment of Shoplifting: Reform Options Whereas the amount of shoplifting by Eastern tourists peaked in 1990 and can be considered less urgent a problem now, the general recent increase is likely to continue for the next few years. Shoplifting is also a phenomenon that has plagued most western countries for more than two decades, without adequate legal measures having been developed to reduce their occurrence. The central problem consists of the twofold nature of shoplifting, namely, that it constitutes only a trivial offense and yet the aggregated damage is huge. Hence, it is not surprising that the recent developments also generated a controversial debate on reform options.

I) Public and Private Enforcement Proposals for reform differ in their emphasis on the role of private enforcement. To assess this problem from a broader perspective requires a digression for a brief theoretical discussion of the relative attractiveness of privately and publicly provided law enforcemenLzO As a starting point, we should take account of the fact that inflicting punishment entails additional costs for the harmed party that are conceptually distinct from the harm originally caused by the criminal act. Since punishment is, therefore, a costly endeavor, private law enforcement will predictably not occur in the absence of some meaningful purpose that justifies such costs. Recognition of this fact amounts to an interpretation of private punishment as an investment to prevent further infringement of the victim’s property. However, if the harm caused by the offender’s act is dispersed among several victims, a serious problem of free-riding on the prosecution activities of others will emerge. Such dispersion of harm occurs not only in cases where an act’s immediate effects are widespread (such as pollution). Even if we can identify some direct victims of an illegitimate act, negative spillover effects (“social pollution”) may exist that affect the larger social group. It is this pattern of negative external effects that characterizes most crimes. We may, in such cases, predict a systematic lack of law enforcement (both in its preventive and repressive aspects) as long as the burden of enforcement is assumed solely by individual actors and no selective incentives are provided by institutional arrangements to encourage enforcement.

‘“As mentioned

above,

an increase

in penalties

is not costless

*“For a discussion of this issue, see my paper, “A public choice annual meeting of the European Public Choice Society.

either. approach

to criminal

law,” presented

at the 1991

P.

449

LEWISCH

Several Law and Economics scholars, however, seem to be more optimistic about efficient private law enforcement. 21 Their analysis does not focus so much on a possible structural lack of incentives“ lL for the individual to prosecute, p3 but rather emphasizes the circumstances of the wrongdoer that might curb these incentives, especially limits to his assets, which may cause a solvency problem. This research activity helped to identify some of the key factors that play a crucial role in the relative attractiveness of private and public law enforcement (Posner 1985): The closer the probability of successful law enforcement is to 1, the more successful a reliance on private enforcement” will be. Conversely, the more acute the solvency problem is, the greater the resort to nonmonetary sanctions (which in most cases are imposed by some enforcement agent). While I myself remain skeptical of proposals for the legal treatment of shoplifting that rely solely on private law enforcement, it is possible to improve the performance of institutional arrangements by adopting double-track solutions that combine public and private forms of law enforcement. 2) Shoplzftiryg and Civil Law a) Shoplifting and tort Luw. In a broader discussion of shoplifting, questions of civil liability (primarily of tort law) arise. If we consider the standard case in which an employee or some kind of surveillance agent observes an attempted shoplifting and hinders its successful completion, there may be little or no harm that the shoplifter has to compensate. From the latter’s perspective, it should suffice to return the item he tried to steal to settle all tort claims. Conversely, the shop owner will argue that tort law obliges the thief, in addition, to reimburse him, first, proportionally for outlays in prevention and protection (i.e., for maintaining the surveillance apparatus) and, second, fully for the costs involved in handling the case. General questions of tort law are concerned here. The fundamental requirement of tort law is the causal relationship between the wrongdoer’s act and the harm inflicted. Recognition of this requirement reveals that the tortfeasor’s act cannot be considered a conditio sine qua non of expenses that were incurred in advance for preventive purposes. Only the empirical phenomenon of shoplifting as such (but not the apprehended shoplifter) induced the shopowner to invest in crime prevention. Hence, there is unanimity in doctrine and the case-law’” that the shoplifter cannot be held liable in tort for these expenses. Conversely, but following the same line of reasoning, courts do order compensation for time and trouble costs that are actually caused by specific shoplifting (i.e., for the actual amount of time employees are em-

“Especially G. Becker/G. Journal “f. Legal Stud& of. Legal Studies 1.

Stigler.

‘Though this point gets vxne Posner, .\U/ITU11.6 at p.1201. “In

attention,

fact, they seem more interested

“Posner

emphasizes

“Law enforcement, malfeasance, and compensation LandesiR. Posner, “The private enforcement

1.SeealsoW.

e.g., S. Shavell,

in the problem

the role of pumtivr

damages

“Economic

of overenforcement to provide

sufficient

Analysis

of enf.orcers,” (1974) 3 of law,” (1975) 4 Journal

of. Accident

(see LandesiPosner

Law” (1987),

p.283:

1975)

incentives

‘“For Austrian law, see especially R. We&r, ‘Zur Ersatzbarkeit wn Detektivkosten (1977) 32 iisterreichische J”ris&eitung 64.5 with further references.

beim Warenhausdiebstahl.”

450

Shoplifting in Austria and “criminal tourism”

from

the east

ployed in watching, seizing and interviewing the offender, and in handling the whole affair.*” Bounties that shopowners promise their employees for the successful apprehension of shoplifters are somewhat ambiguous in terms of tort law. As a device for crime prevention, designed to induce employees to be alert to possible thefts, they are promised by the shopowner in advance of any specific shoplifting. To that extent, bounties do not meet the causation requirement. But, since the bounty is only due if some shoplifter actually attempts to commit an offense, courts tend to recognize causality in such cases. However, they impose a limit on the size of bounties: They are considered legitimate only if they do not exceed a “reasonable amount.” This limitation is economically sound. Compensation for preventive outlays is ambiguous from an efficiency point of view. If the wrongdoer has to compensate for bounties, irrespective of the amount, tort law would induce an overinvestment in crime prevention, limited only by the presumed solvency characteristics of wrongdoers. It might also provide an incentive for private entrapment. In turn, if the shopowner is allowed to collect only reasonable bounties (for example, as a mark up to genuine tort compensation), the institutional framework would encourage private law enforcement and help to reduce the chances of a wrongdoer committing his act undetected.” Apparently shopkeepers and enterprises have adapted to this institutional framework of tort law and its inherent incentive structure. Despite all the difficulties in gathering hard evidence on this problem, we can observe that shopowners seek to economize on their general expenses for crime prevention, since they cannot obtain compensation for such expenses. Instead, shops increasingly switch to some sort of bounty system, which the shoplifter has to reimburse. As revealed in several interviews, these bounties are as high as $90.‘* Such a system of compensation by piece rate is generally favored in the Law and Economics literature.‘” However, the apparent potential of tort law to encourage some enforcement activity under this institutional arrangement cannot by itself justify relying solely on civil law to regulate shoplifting. To isolate the differential advantage of a certain rule requires careful evaluation, both of the institutional context to the problem and of the factual circumstances. Let me first discuss an example in which private law enforcement works and apparently is more attractive than public enforcement. b) Civil action against disturbance of possession. The legal remedies against disturbance of possession by wrongfully parked cars in Austria provide an interesting illustration for a set of institutions that generates a well-functioning system of private

26The courts order compensation for the value of the time spent as such. enterprises get compensation even though the employee has, in any event, “1 have to admit,

however,

that this institutional

framework

would

entail

It follows from to be payed. a complicated

this approach

optimization

that

problem.

2”Moreover, a certain relation seems to exist between the harshness of the criminal enforcement institutions and the willingness of the shoplifter to pay compensation or bounties to the enterprise. The perspective of an effective criminal prosecution thus facilitates an arrangement outside the courts. ‘l‘his might have been one of the reasons why in IWO rhe shopkeepers called for legislative measures to efficiently prosecute shoplifters; not so much because they intended to hand over every shoplifter to the police, but rather because they needed this institutional background as an implicit threat to recover their expenses. %ee, e.g., G. Becker/G. Journal of Legal Studies

Stigler, “Law enforcement, 1 (here: p. 14).

malfeasance,

and compensation

of enforcers,”

(1’374) 3

P.

451

LEWISCH

law enforcement. The Austrian civil code (5 339 ABGB) provides protection against disturbance of possession by virtue of a specifically tailored legal device for immediate action (within 30 days) that is easy to obtain and hence effective as a legal weapon. The plaintiff has only to prove that the alleged offender disturbed previously quiet possession and that this disturbance is either continuing or, if already terminated, is likely to be repeated. For illegally parked cars, the courts have virtually eliminated this last requirement: Courts either take the likelihood of repetition for granted or shift the burden of proof (namely, that there is no such danger) to the offender. Thus, a wr~~tlgfully parked car on private property for a certain (but short-some rulings consider 15 minutes as sufficient) period of time constitutes a disturbance of possession. “I If the claim is successful, the court will issue a double ruling: First, it declares that quiet possession has been violated; and, secondly, it obliges the offender to respect the plaintiff’s possession in the future. This ruling does not include any penalty in the technical sense, but, and this is the crucial point, the Ioser (= the offender) has to compensate the winning plaintiff for the costs of the suit. Such costs consist primarily of the obligation to reimburse the lawyer according to a specific tariff” (and for possible direct financial outlays). This institutional framework was not designed to provide special incentives in terms of a bounty system that would encourage private enforcement. However, as we shall see, in its actual working this set of rules amounts to a system that operates as if a bounty system were in operation. Legal action in cases of disturbance of possession that concern illegally parked cars is routine work. Lawyers can use a stereot.yped form of legal action, merely filling in the details of the specific case. If the victim is himself a lawyer, he will get reimbursed according to the tariff and, in most cases, pocket a gain. Similar situations may and do actually occur if an individual’s possession is repeatedly violated and he seeks to protect it from recurrent infringement. if this should be the case, our individual may engage in a “joint venture” with some lawyer and share the profits from successfully suing offenders. Since this is a profitable enterprise, such “deals” actually take place. The example of illegally parked cars allows, furthermore, for an institutional comparison of different systems of law enforcement in operation. Consider a person whose garage has an access from a public street such that a double-track system of law enforcement is feasible: Parking in front of garages (i.e., blocking the access) is illegal and constitutes an offense under administrative penal law. However, the legal means of protection under administrative law are not promising: There is practically no chance of reimbursement for time and trouble costs. Police officials, though obliged to pursue the prosecution of reported offenders, are not too cooperative in providing instant help against reported offenses. On the other hand, the same act (i.e., blocking th e access to one’s own garage) disturbs private possession and allows for the legal remedies outlined above. Since the instit.utional arrangement works as if there were a bounty system in operation, the victim has a strong incentive to take an action against the disturbance of quiet property. The financial consequences for the offender, when sued, are far greater than those arising from administrative penal law and, therefore, the option of civil action exerts stronger deterrent effects. As a

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452

Shoplifting in Azutria and “criminal tourism” from the east

result of the incentives law enforcement.

to private action, we have a well-functioning

system of private

To evaluate the relative attractiveness of private law enforcement, however, we have to take account of the fact that the probability of conviction is close to 1 in cases of illegally parked cars. A violation of quiet possession can be proved simply by a photo (the cost of which is reimbursed). Furthermore, no problem of identifying the offender or assigning legal responsibility arises: Cars have number plates and the general office of traffic administration will, on request, reveal the owner’s identity. In addition, the owner will be held accountable by the courts for the illegal parking, irrespective of whether he himself drove the car (the owner may, of course, recover his loss from the driver). Since successful action against alleged violations of quiet possession does not require the wrongdoer’s intent in a strict sense, the defenses available to the latter are very limited. These characteristics give rise to a high probability of winning the suit, which without exaggeration comes close to 100%. Furthermore, the ownership of a car is a reasonably reliable signal that no solvency problems will occur.32 3) Considerations

Concerning

the Legal Reform

of Shoplifting

In the light of the above discussion, we can now address the question of reform options for dealing with shoplifting. Several possibilities exist. They share, first, the view that effective legal remedies are needed to reduce shoplifting and, secondly, considerable skepticism as to whether the current legal provisions are adequate for this task. The underlying policy problem has two dimensions. While from an ex post perspective we tend to emphasize the trivial nature of the offense and are likely to reject punishment, it is clear that if this were the general policy potential offenders would strategically adapt to the change in the incentive structure and would steal with impunity. Suggestions for reform differ in their general orientation. While some advocate a general decriminalization of shoplifting (up to a certain amount), replacing the criminal law with civil sanctions (most prominently tort law), others urge a specifically tailored provision of administrative penal law that would cover shoplifting. In the recent debate, some scholars have proposed a so-called third track-type of reform. They would leave the criminal code unamended, and yet allow for a settlement of petty shoplifting without formal sanctions being invoked. Reduced to its barest essentials, the proposal amounts to a system in which, at an initial stage of the charge, the defendant might, under the supervision of a public prosecutor make a financial contribution to some charitable organization. If this were the case, the public prosecutor would close the file without any sentence being ordered. The incident, albeit documented, would not be reported in the criminal record. However, the procedure would be strictly voluntary: If the defendant refused this settlement (e.g., because he considered himself not guilty), the normal procedure would commence. The financial contribution would be high enough to provide, together with the unpleasant experience of the whole affair, sufficient incentive to discourage shoplifting.

3’However, action against disturbances of quiet property would not have been equally promising against foreigners from the East. The eff~ectiveness of this remedy would hinge on the legitimacy of blocking the illegally parked car to hinder the return of the wrongdoer to his home country. As long as this blocking is not feasible, similar problems to those discussed above in the context of shoplifting would emerge.

P.

LEWISCH

453

Such a system is likely to be implemented in Austria in the near future. While the underlying rationale of this proposal is quite clear, it seems doubtful whether such a formal and bureaucratic treatment of shoplifting is required. An outline of the most promising mode of legal reform is, fortunately, not my topic here, and its technical details would certainly reach beyond the scope of the paper. But by way of very general outline, I tend to advocate a double-track system that combines elements of public and private law enforcement. In other words, shoplifting should remain a criminal offense. Insofar as petty shoplifting is concerned, the law should allow for private (and not bureaucratic) settlement of the case outside of the courts. To accomplish this task, the legal provisions have to provide adequate incentives for the shopowner to engage in such a settlement. A piece-rate “bounty system” would encourage this system to operate satisfactorily. Before considering some implications of such a system, let us discuss alternative options. Why not simply decriminalize shoplifting and leave it to tort law (and bounties in the sense described above) to provide sufficient disincentives, as with the use of civil actions to deal with illegally parked cars? In the case of disturbed possession through wrongly parked cars, the probability of successfully “sanctioning” the apprehended offender was close to 1. With shoplifting it will be close to nil. The probability of detection, to be sure, will be positive and might even be, depending on the skills of the employees, substantial. We may assume, furthermore, that there are no difficulties of proof concerning factual circumstances. Yet problems arise in checking the offender’s identity. In this respect, unfortunately, individuals do not have “plates” and, moreover, no legal provision obliges the individual to reveal his identity, as long as only civil obligations are concerned. If the shoplifter refuses cooperation, the civil law will remain unenforced. The Austrian legal institutions, like those of most other countries, provide neither the possibility of apprehending wrongdoers to secure civil obligations, nor any other remedy to check the wrongdoer’s identity by force. Since there is no way to prove his identity, the possibility of suing him and all options of an effective enforcement of the civil law will be effectively foreclosed. The Becker/Stigler approach (1974) stresses and, as it appears to me, overstresses the factual circumstances that might impede successful prosecution (e.g., difficulties in actually searching out the wrongdoer). In my view, technical legal questions of the institutional framework are of, at least, equal importance. To be sure, one could in principle amend the civil code and explicitly provide a clause that allows the individual to arrest a tortfeasor or at least check his identity by force. Yet such a remedy would have carefully to balance individual liberties against the goal of effective private law enforcement,33 and it appears highly doubtful whether we could reach an agreement on the power of arrest to secure civil obligations. By the same token, it would not suffice to decriminalize shoplifting and make it an offense of administrative penal law: At least as currently formulated, the grounds for arrest under administrative penal law would not cover the private apprehension and arrest of shoplifters. The double-track proposal, as advanced in this paper, would avoid such disadvantages. The option would dramatically reduce the problem of identifying offenders.

531f the individual can onlv rely on civil sanctions, he may f.ace the defendant’s insolvency. The problem would be serious in relation to foreigners (from the East) who might not bring along sufficient financial means LO cover these sanctions.

454

Shoplifiing in Au&in

and “criminal tourism”

fromthe

east

Since shoplifting remains a criminal offense, all relevant powers that allow the individual to seize and apprehend the perpetrator would be maintained. Furthermore, the criminal character of shoplifting would not only be a formal feature; it would also signal that society does take theft seriously, that it considers it a wrong and the perpetrator blameworthy. This system appears to display all the advantages of the “third track” alternative and yet avoids the bureaucratic apparatus of the latter. However, I have to admit that a system of private settlement would mean that the settled cases (and attempted shoplifting) would not be documented in any way. Some criminals who repeatedly commit shoplifting might therefore benefit from the system of law enforcement proposed here, since it would allow them to conceal their true character. So far we have assessed the institutional requirements necessary to bring private enforcement into operation and have disregarded the positive incentives that would encourage such enforcement. The double-track proposal would have to provide selective incentives for a private settlement of trivial shoplifting outside the courts, and it would do so by relying on bounties. Naturally, the wrongdoer would remain accountable to the shopowner for time and trouble costs under tort law. Apart from tort, the shopowner should be formally allowed to promise and collect a bounty from the apprehended wrongdoer that would serve as a crucial incentive for private enforcement. The size of the bounty should be regulated and limited by legislation. One could think here of some standard amount, say 1000 AS, that would be collected irrespective of the attempted theft. More sophisticated models might allow for some variable bounty that would vary between a lower limit of, say, 500 AS and a ceiling of 1500 AS. The right to collect the bounty (at least its full amount)-and this would be a crucial feature of the system-must depend on a successful settlement of the case outside the courts. In more sophisticated models the bounty would be split by, say, granting one third or one quarter to the shopowner, leaving the rest to be collected only if the courts are not concerned. This system would offer advantages for the apprehended offender. Since the private settlement would be strictly voluntary, such an offender would only engage in the process if it would be beneficial to him, that is, if he would prefer the settlement (notwithstanding the bounty costs involved) to a formal treatment of his case at court that might lead to a judicial sanction (and which would entail some stigma effect). The alleged shoplifter might refuse to engage in a private settlement for any number of reasons, but he would do so in most cases if he considers himself not guilty. The voluntary character of such settlement would ensure that shopowners would not decide factual questions conclusively themselves. Also, this system would embody clear incentives for the shopowners to settle, if possible, cases outside court, since only in such circumstances would he obtain the bounty. In this respect it seems important to the bounty at some reasonable amount, such that the shopowner would consider the option to report “hard cases” to the police, irrespective of the loss of the bounty. But what if the shoplifter pays the bounty and the shopowner still reports him to the police? There are at least two different ways of handling the problem. Either the shopowner would be bound to reimburse the bounty in this case and to allow a criminal prosecution of the reported perpetrator or, as I would tend to argue, one could interpret the payment of the bounty together with the satisfaction of all civil obligations as sufficient to foreclose any further prosecution.

P. LEWISCH

455

Let me summarize the essentials of the double-track proposal. Under it shoplifting would still constitute a criminal offense. However, the shoplifting dealt with at court would be reduced to hard cases that merit formal trial (and mostly would lead to conviction). The incentive structure would encourage the handling of trivial cases outside the courts, providing incentives for shopowners to offer settlements and for the wrongdoers to accept them. Since the bounty would create incentives for private enforcement and for apprehending potential offenders, it would reduce the possibility of shoplifters remaining undetected. This increase in the probability of detection would reduce ex ante potential gains from shoplifting and would discourage future offenders. Last but not least, it would help save the expenses that are involved in every bureaucratic type of legal reform.