Steven Landsburg has a clever column (click here) pointing out that the economic damage prevented by executing a murderer is less than damage caused by the author of a wildly successful computer virus. If we’re willing to fry Jack the Ripper, why not send Urkel to the chair?
Landsburg notes that governments provide goods markets won’t, such as crime prevention. The implication is that cost-benefit analysis would dictate that people would be more willing to pay for prevention of property crime rather than personal safety.
For me, Landsburg misses a simple point: human beings are probably hard wired to care about concentrated damages (like murder of a person) rather than diffuse damages (like screwing up everybody’s email for an hour). No cost-benefit analysis will likely persuade people to go against this intuition.