Course syllabus

Economics of Crime

Semester & Location:	Spring 2026- DIS Copenhagen
Type & Credits:	Elective Course - 3 credits
Major Disciplines:	Criminal Justice, Economics, International Relations
Prerequisites:	One course each in macro- and microeconomics at university level.
Faculty Member:	Kristian Sørensen- Contact via Canvas inbox
Time & Place:	Tuesdays and Fridays 13:15-14:35 Classroom: V10-A32

 

Course Description

The study of crime has long been shaped by moral, legal, and sociological perspectives; yet, the economics of crime provides a uniquely systematic and empirical lens to understand why crimes occur, how societies respond, and how incentives shape both criminal and institutional behavior.  This approach renders a conceptualization of criminal activity as a decision made under constraints - influenced by opportunity costs, expected returns, risk, and enforcement probability. It seeks to integrate both the tangible, intangible and societal costs of crime to be able to measure efficiency and equity of the criminal justice system as a more complex market of deterrence and punishment.

The rise of organized crime at an international level has created huge illicit markets managed through sophisticated business models - in drugs, in human trafficking, in white collar crimes, and in weapons trading. In addition, applying an economic lens to cybercrime and environmental crime domains capture the shifting nature of harm and enforcement in a digital AI and ecologically vulnerable age. To come to terms with these phenomena, it is necessary  to take into account the dynamic developments in globalization, international relations, and in international finance and law.

In this course, we explore ways to cope with threats posed by the illicit criminal markets to the open society.

1. The course first establish conceptual and methodological foundations: from the basic concepts and statistics of crime and the cost-of-crime frameworks to opportunity cost models and the allocation of criminal justice and law enforcement resources. These provide an analytical scaffolding for later explorations of specialized and transnational forms of criminality.

2. The next step examine how economic models can clarify the logic of crime supply, optimal enforcement, and cost-benefit analysis, bridging theory with applied domains such as violent crime against persons, property crime, and victimless offenses. They reveal how incentives, social norms, and institutional designs interact - and how marginal deterrence or enforcement saturation can contribute to influence both crime rates and justice expenditures.

3. Moving further, the course engages directly with the rise of organized crime  in international contexts. Here, rigorous market  frameworks are set up to analyze criminal cartels and organized crime groups as profit-maximizing enterprises with internal governance, transaction costs, and enforcement of collusion. In particular, drug trafficking markets - from cocaine and heroin to opioids and synthetic stimulants - are discussed as paradigmatic examples of globalized illicit economic models shaped by asymmetric regulation, demand elasticity, and technological innovation.

4. The ensuing exploration of interconnected engines of organized crime such as corruption, fraud, and shadow finance demonstrate that illegal crime markets no longer exist in isolated national silos but function as an adaptive crime network operating across borders, exploiting weak governance, digital anonymity, and global capital mobility - not least through money laundering. Here, economics intersects with geopolitics: illicit markets mirror legitimate trade flows and financial globalization, blurring distinctions between legal and illegal economies.

5. The recent inclusion of costs of war and war crimes - not least emanating from the Syrian and Ukrainian conflicts - acknowledges that large-scale violence and corruption are not only moral or political breakdowns but also economic processes involving rents, resource capture, and institutional erosion.

6. The course culminates in a reflection on international cooperation, where economic analysis underscores how fragmented jurisdictions, inconsistent enforcement incentives, and corruption at elite levels hinder collective action. As the world becomes increasingly “gated” - open to data and capital yet closed in trust and solidarity - cooperation must rest on legitimacy, shared responsibility, and adaptive institutions capable of addressing cross-border criminal markets. To a great extent this has made international cooperation situational and contingent. 

Together, this course forms an integrated framework for understanding the economics of crime as an inverted mirror of global economic systems. They invite students to confront the crucial question of how societies should design institutions and capabilities that can counteract criminal incentives of cartels and organized crime groups in an interconnected world. Right now, these criminal market structures engender devastating human and societal consequences, seriously threatening the nation states’ ability to uphold justice, accountability, and dignity

 

Learning Objectives

At the end of this course you should be able to:

• Understand the complexity of the economics of crime and the debates surrounding the ways and means to deal with crime.
• Gain knowledge of various models of the economics of crime, and their application in terms of crimes against property and persons, as well as factual knowledge of the economic allocation of criminal justice system in punishment and prevention.
• Develop analytical tools for mapping organized crime markets and their economic impact
• Address responses to current international problems of the economics of crime, based on the underlying theoretical and systemic underpinnings of the illicit international markets.

Faculty

Kristian Sørensen

Cand. polit. (Economic and Social Science, University of Copenhagen). Former Director at United Nations Development Program (UNDP) in NY. Head of Dialogue Development, carrying out consultancy services for mostly EU in Eastern Europe, Russia and the Middle East. External Adjunct Professor in International Business at Copenhagen Business School (CBS). With DIS since 2011.

 

Course Requirements

This is an intermediate level economics class and requires that you have taken basic microeconomics and macroeconomics courses.

 

The key reference texts for the course are:

Compendium of the Economics of Crime in Transnational Organized Markets, Kristian Sørensen: 2025

European Union: Serious and Organized Crime Threat assessment SOCTA, 2025

Global Initiative against Transnational Organized Crime: Intersections Building Blocks of a Global Strategy against Organized Crime, 2024

Global Initiative against Transnational Organized Crime: Global Synthetic Drug Markets - The Present and Future by Jason Elich, March 2024

UNODC: World Drug Report, 2022, 2024 and 2025

UNODC: Global Overview of Drug Demand and Supply, Latest trends, cross-cutting issues, 2023

UNODC: Drug Markets: Opiates, cocaine, cannabis, synthetic drugs, 2021

US Drug Enforcement Administration NDTA: National Drug Threat Assessment 2024

UNEP-Interpol Rapid Response Assessment: The Rise of Environmental Crime, 2018

Bureau of Justice Statistics: Criminal Victimization, 2022

Bureau of Justice Statistics: Patterns & Trends in Homicide in the U.S. known to Law Enforcement, 2022

Department of State: Trafficking in Persons Report, 2024

The Cost of Crime to Society: New Crime-Specific Estimates for Policy and Program Evaluation, Kathryn E. McCollister et.al., 2010

Robert B. Cooter Jr. and Thomas Ulen: Law and Economics, 2015 ("CU")

Hellman and N. Alper, Economics of Crime, 6^th edition, Pearson Publishing, 2006 (“HA”)

P.L. Reichel and Jay Albanase: Handbook of Transnational Crime and Justice, Sage Publications, 2013 (“RA”)

All texts, together with case studies and class slides are available electronically at the DIS Canvas.

 

Field Studies

Two field studies will be carried out in Denmark:

First field study day comprises visit to the Open Drug Rooms  representing an important harm reduction program. 

Second field day will be a meeting with former drug dealers, providing an insight to the functioning of the Danish drug market and a recount of their personal experience.

 

The Course Grading

will be allocated as follows:

Participation	25 %
Mid-term short Assignment	25%
Comparative research project	30 %
Expert Article	20%

Participation: Your participation grade will be determined by 3 factors: attendance, preparedness for class, and active engagement in lectures and other class activities. You are required to attend each and every class. If you miss a class, you must contact an instructor as soon as possible and provide an explanation. The assigned readings for each lecture should be read prior to the lecture. Here is a suggestion: as you read the assigned readings, write down 2 or 3 things that strike you about the reading, such as some key findings, interesting arguments, questions you have etc. Then review your notes once you arrive in class. You are expected to actively engage in class by asking questions, making comments, sharing ideas, etc. Learning is a two way road and the more you talk in class, the more the instructors will learn about how well you understand the material being presented, how to tailor and focus the course material, etc. An integral part of the teaching approach will be the solving of individual or group assignments for each class that will enable you to better participate in the learning. Also active participation in the field studies will be taken into account.

In addition to home work assignments, the students will answer a Mid-term short answer home assignment, complete a comparative research project, and write an “expert article” based on their research.

Mid-term short home assignment: The assignment is made to assure that basic theories and methods in the course are understood.

Comparative research project: A group of 2 to 3 students will write a topical paper on Economics of crime. The paper must be unique so the same subject will not be accepted among the groups. The chosen title shall be based on a topical economic crime issues to be researched by the group and be presented in a comparative international context. The choice of subject will be approved by the teacher.

Expert Article: The student is taking on the role of an economic journalist, producing a max. two-pager expert article on a subject of choice in economics of crime that has kindled an interest or even indignation.

Computer policy: Laptop computers are allowed in class  for note-taking purposes. Any other use will have a negative impact on your final grade. Furthermore, any student violating this policy will not be allowed to continue using their laptop in class for the remainder of the semester.

Academic Regulations  

Please make sure to read the Academic Regulations on the DIS website. There you will find regulations on: 

• Course Enrollment and Grading  
• Academic Expectations and Honor Code 

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