Does Capital Punishment Have a Deterrent Effect? New Evidence from Post-moratorium Panel Data

Evidence on the deterrent effect of capital punishment is important for many states that are currently considering a change in their position on the issue. We examine the deterrent hypothesis using county-level post-moratorium panel data and a system of simultaneous equations. The procedure we employ overcomes the aggregation problem, eliminates the bias arising from unobserved heterogeneity, and offers an inference which is relevant for the current crime level. Our results suggest that capital punishment has a strong deterrent effect. An increase in any of the three probabilities - arrest, sentencing, or execution - tends to reduce the murder rate. In particular, each execution results, on average, in 18 fewer murders - with a margin of error of plus or minus 10. Tests show that results are not driven by "tough" sentencing laws, and are also robust to various specification choices. Our main finding, that capital punishment has a deterrent effect, is fairly robust to choice of functional form (double-log, semi-log, or linear), state level vs. county level analysis, and sampling period.