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WHITE COLLAR CRIME IN CONTEMPORARY SOCIETY 4TH ED.

CHAPTER 2

STUDYING WHITE COLLAR CRIME

AND ASSESSING ITS COSTS

Trusted Criminals

Designed by: Jordan Land, M.S.

Underlying Assumptions & Different Perspectives

  • How can we best study and understand the many different dimensions of white collar crime?

  • We can begin by recognizing that all studies of white collar crime explicitly or implicitly adopt assumptions about such matters as:
  • The nature of reality
  • Human nature
  • Basis of morality
  • The character of society

Underlying Assumptions & Different Perspectives

  • It is necessary to differentiate between positivistic and humanistic approaches to the study of white collar crime
  • Positivistic approach - draws on the tradition of the natural and physical sciences, generally assumes that white collar crime can be studied “scientifically”
  • They believe that the best way to study white collar crime is through systematic observation and quantitative analysis
  • Humanistic approach - rejects traditional scientific methods and looks to the tradition of humanities
  • They believe that the best way to study white collar crime is through interpretive observation and qualitative methods

The Complex Nature of White Collar Crime

  • Since the 1970s, the unit of analysis in white collar crime studies has increasingly shifted from the individual to the organization

  • White collar crime is complex and involves large organizations acting in concert with each other, numerous individuals occupying different positions within these organizations and, a series of complicated transactions carried out over long periods of time

The Complex Nature of White Collar Crime

  • Because this field of study is complex, one must understand aspects of many different fields, including:
  • Economics
  • Management
  • Law
  • Sociology
  • Psychology
  • Organizational theory

  • It is difficult to get powerful people and institutions to cooperate with a white collar crime research project

Gaining Access for Research

  • To obtain cooperation of an organization in a research project on aspects of corporate crime, the proposal must:

  • Be delivered in a non-threatening way

  • Incorporate a framework

  • Use terminology familiar to the organization

  • Be viewed as having some potential benefit or “payoff”

Obtaining Statistics

  • Because there is no real white collar crime equivalent to uniform crime report data, data must be obtained from various limited sources such as:
  • Governmental agency and annual financial reports
  • Newspapers
  • Journals

  • Direct observation is the least effective method because of the large number of actors involved and their dispersal over time and place

Obtaining Research Support

  • Most work on corporate crime is produced independently with modest academic funding

  • Whenever the government or corporations fund research on white collar crime, it seems relevant whether such finding entities measure the researchers by some ideological standard and whether the researchers consciously or subconsciously adapt their research to accommodate the sponsor’s perspective or interests

Research Methods for Studying White Collar Crime

  • We are all exposed to white collar crime through the media
  • The quality and credibility of reports vary greatly
  • There is an intrinsic bias in much of the media toward the sensational; getting a good story often takes precedence over a balanced and thoroughly accurate representation of the facts
  • However, journalists play a crucial role

Research Methods for Studying White Collar Crime

  • Major media have both formidable resources and the access that are often required for effective investigations of the illegal activities of high-level governmental or corporate officials

  • Journalists played a major role in reporting and analyzing recent corporate scandals and alleged wrongdoing, at least in the wake of their exposure

Scholarly Research and White Collar Crime

  • The formal study of white collar crime has used a variety of research methods

  • Researchers might use a mixture of case study, interviews, direct observation and analysis of secondary data

Case Studies

  • The case study is the in-depth study of a single case, drawing upon a wide range of sources and resources, including court records, news reports, and interviews

  • The case study attempts to provide a relatively comprehensive exploration of the chosen case, going beyond the specific sequence of events involved in the case to identify the most convincing form of explanation for it as well

Case Studies

  • Case studies have also been a central feature of the business school curriculum, although here the emphasis is typically on successful businesses

  • The overriding advantage of the case study is that it can provide us with a concrete understanding of the dynamics and realities of a particular white collar crime case

  • The principal limitation is that the particular case addressed may be quite atypical

Experiments

  • Is a method of study exemplifying a positivistic or scientific approach, has to date seldom been used in the study of white collar crime

  • Classical experiment calls for an examination of the effects of an independent variable on a dependent variable

  • These experiments are useful in the study of learning, memory, perception and related matters

Experiments

  • Laboratory experiments are highly controlled and have specific settings

  • Field experiments are carried out in real life settings rather than in a laboratory

  • Natural experiments allow the researcher to observe, but not manipulate, a real world situation in order to identify the effect of some relevant independent variable

Surveys

  • The survey is another major research method
  • It is most readily associated with the study of opinions, attitudes and beliefs but can also be used to explore experiences
  • The major challenge is obtaining a sample that represents the population about which one wants to generalize
  • Another challenge is obtaining a response rate high enough for the survey to be meaningful
  • And the last challenge is formulating questions that are not loaded

Surveys

  • Surveys can contribute greatly to our understanding of white collar crime because we sill have much to learn about patterns of involvement, rationalizations, and attitudes pertaining to white collar crime issues

  • Surveys have also attempted to establish the stigmatizing and deterrent effect of criminal sanctions for white collar offenses

Observational Research

  • Involves direct observation of individuals, a group, or an organization over a period of time
  • It has been applied to white collar crime in a somewhat limited way because gaining access to either criminal enterprises or social control agencies is difficult
  • Sometimes insiders provide what amount to observational studies
  • Observational fieldwork has probably been mostly widely used in studies of regulatory agencies

Secondary Data Analysis & Event History Analysis

  • Secondary data is not directly generated or collected by the researcher
  • It takes the form of statistical information collected by various official agencies
  • The validity of any analysis of statistical data is limited by the quality and accuracy of the data
  • Statistical data is open to a variety of interpretations

Archival Data Analysis & Historical Ethnography

  • The more complex a crime, the more likely it is to generate a large file of archival data, or written documents

  • Much of the evidence in such cases is documentary

  • The principal limitations of archival data analysis are the selective nature of what is recorded in the first place and the incompleteness of the existing documentary record

Content Analysis

  • Is the method that systematically analyzes the representation of something in the media

  • Content analysis of newspapers and other such sources documents the high level of occurrence of white collar crime

Measuring White Collar Crime:
How Prevalent is it?

  • A critical view today contends that crime statistics are products of particular agencies and entities, each with ideological biases, strategic purposes and finite resources
  • Statistics about criminal activity obviously should not be confused with statistics on criminal justice system responses to such activity
  • Statistics of official agencies direct much more attention to conventional crime than to white collar crime

Measuring White Collar Crime:
How Prevalent is it?

  • Several studies of victims of consumer fraud have documented that such victims are unlikely to report the crime to the police

  • Many organizational victims of fraud are especially reluctant to file reports because they fear negative publicity and a public loss of confidence in the organization

Measuring White Collar Crime:
How Prevalent is it?

  • There are numerous problems with regulatory agency data
  • These agencies have considerable discretionary leeway in defining offenses
  • Because these agencies often focus their enforcement activities on corporations rather than on individuals, they are not likely to be reliable sources of data on individual offenders, and they are not organized to track either organizational or individual offenders over time

Victimization Surveys & Self-Report Studies

  • Many criminologists adopted the notion that crime data collected from sources less removed from the criminal event was likely to be more accurate

  • Someone who has been robbed is much more aware of their victimization than a person who overpays as a result of price fixing

  • In private surveys, between 1/3- 3/4 of the respondents reported having been deceived or defrauded by marketing schemes

Victimization Surveys & Self-Report Studies

  • Self-report studies involve respondents being asked to report anonymously on their own lawbreaking activities, and have revealed much higher levels of illegal activity than are suggested by official data

  • For the most part, these surveys have focused on juveniles and not white collar criminals

The Costs & Consequences of White Collar Crime

  • Measuring the economic cost of crime is more difficult for white collar crime than conventional and other forms of crime because:

Of ongoing disputes about defining and identifying white collar crime

A high percentage of white collar crime is either not reported or officially identified compared to conventional crimes

There is no uniform way to measure costs even when a crime is identified and reported

Direct Costs

  • Some economic costs of white collar crime are clearly direct costs
  • Conventional crime involves fraud and in these cases costs are typically defined in terms of the victims’ losses
  • Losses from white collar crimes are immense and dwarf those of conventional crimes
  • It is difficult to estimate the economic losses of:
  • Tax evasion, environmental pollution, sale of unsafe products, antitrust violations, etc.

Indirect Costs

  • Indirect costs are higher taxes, increased cost of goods and services and higher insurance rates

  • In conventional crimes, these costs are:
  • Cost of locks, gates, burglar alarms, etc.

  • The conventional criminal justice system expends proportionally less money on white collar crime than on conventional crime, despite the much greater costs of white collar crime

Indirect Costs

  • Residual economic costs are also a consequence of white collar crime

  • In the case of conventional street crime, the loss of business for retail stores in high-crime areas is an example of a residual economic cost

Physical Costs

  • These include personal injury and loss of life
  • Physical costs are most immediately associated with conventional predatory crime
  • Physical costs of white collar crime exceed such costs for violent personal crime
  • Physical costs associated with white collar crime include:
  • Death and injury, pollution, unsafe working conditions, and unsafe products

Other Costs

  • These include psychological trauma of victimization

  • For white collar crimes, these include distrust and erosion of confidence in major institutions
  • These may include alienation, de-legitimation, and cynicism

Victims of White Collar Crime

  • All of us are victims of various white collar crimes, often without being aware of it
  • Traditionally, the term victim has been most commonly applied to those harmed by deliberate acts of predation
  • In the broadest terms of white collar crime, people who suffer from racism, imperialism, sexism, and the like are victims
  • In the 1970s, victimology and a victim’s rights movement was developing and was directed toward victims of conventional predatory crimes

Victims of White Collar Crime

  • All of us are victimized
  • We are generally less likely to be aware of the victimization than when victimized by a conventional crime
  • Workers and employees are victimized by hazardous and illegal conditions
  • Consumers are victims of price fixing and the sale of unsafe products
  • As customers, clients and patients, we are victimized by unethical practices
  • As citizens and residents, we are victimized by corporate pollution

Victims of White Collar Crime

  • Most forms of white collar crime victimization are defined as accidents or “disasters” beyond human control
  • Victims of white collar crime are aware of their victimization, but are confused about how to report it and pessimistic about receiving meaningful assistance from the criminal justice system
  • There has been little serious study of white collar crime victims who pursue cases, and accordingly broad generalizations are not warranted

The Role of the Victim

  • Victim blaming is associated with rape and has been criticized by feminist commentators
  • In both white collar crime and rape cases, victims may be stigmatized
  • The police are less sympathetic to corporate victims of fraud than to individual victims of fraud
  • Most victims of white collar crime are not privileged members of society and are unfairly blamed for their victimization

Specific Forms of Suffering
of White Collar Crime Victims

  • The costs of white collar crime have a specific impact on victims
  • These range from financial losses to damage to physical and psychological health
  • Losses can range from the trivial to financial devastation
  • The effects on individuals are not uniform
  • There are restitution programs for victims of conventional crimes, but not for white collar crimes

Specific Forms of Suffering
of White Collar Crime Victims

  • The physical impact of white collar crime takes many forms
  • Development of painful and fatal conditions
  • Physical maladies ranging from birth defects to sterility to cancer
  • Minor injuries and illnesses

Specific Forms of Suffering
of White Collar Crime Victims

  • The psychological suffering is different than conventional crime because:
  • The realization of victimization is likely to be more gradual, occurring years after the illegal event or process
  • White collar crime is less likely to have a sharply defined target