Excess burden of criminality and redistribution Dominique Demougin a, *, Robert Schwager b a Otto-von-Guericke-Universita ¨t, Magdeburg, Germany b Zentrum fu ¨r Europa ¨ische Wirtschaftsforschung, GmbH, Mannheim, Germany Received ●●●; accepted 17 February 2000 In the Western world, some provision for those threatened by the extremes of indigence or starvation due to circumstances beyond their control has long been accepted as a duty of the community. ... The necessity of some such arrangement in an industrial society is unquestioned— be it only in the interest of those who require protection against acts of desperation on the part of the needy . . . F. Hayek 1 Abstract A model where a portion of the population participates in illegal activities is developed. The propensity to participate in crimes depends on the probability and the opportunity cost of being arrested. The government can influence these variables by law enforcement expenditures and by social transfers. We analyze the cost minimizing policy mix and the incentive of wealthy agents to finance redistribution. We compare this approach with standard modelling where redistribution follows from altruistic preferences. © 2000 Elsevier Science Inc. All rights reserved. 1. Introduction In the present paper, we examine the need for security as raison d’e ˆtre for the introduction of distributional objectives. We find that tax payers are, indeed, willing to finance transfers to reduce criminality if the safety to be implemented exceeds a critical value. Whether the * Corresponding author. Tel.: +49-391-671-8546; fax: +49-391-671-1218. E-mail address: dominique.demougin@ww.uni-magdeburg.de (D. Demougin). 1 Hayek, F., The Constitution of Liberty, p. 285 (1960). International Review of Law and Economics 20 (2000) 329 –351 0144-8188/00/$ – see front matter © 2000 Elsevier Science Inc. All rights reserved. PII: S0144-8188(00)00035-1