Law and Economics of Restorative Justice: Why Restorative Justice Cannot and Should Not Be Solely About Restoration

The economics jury (or sentencing circle) is still out on restorative justice. Clearly, a scheme that in some sense poorly mimics the tort system will be viewed by economists as doing little to prevent the recurrence of crime. Indeed, the lofty goal of compensation will be unfulfilled because of inadequate consideration of all the external victims of the crime apart from the direct victim and (in some loose sense) the community. On the other hand, the current system fails to compensate the victim and something has gone awry with the level of deterrence.

Moreover, the current system may exacerbate the injuries to society by creating more savvy criminals under the guise of "corrections." The economics policy prescription for restorative justice is clear. Apart from victim compensation, some mechanism must be in place to deter criminals from engaging in repeat offenses. The preference shaping mechanisms of therapeutic programs are useful for reducing recidivism, and certainly there is no harm in making victims feel somewhat better off while minimizing the costs to society of imprisonment. However, in order to deter future offenders, restorative justice ought to be combined with some mechanisms that have deterrence value.