Original Research

On the shady side of economics

J. H. van Heerden, J. N. Blignaut, N. S. Groenendijk
South African Journal of Economic and Management Sciences | Vol 2, No 2 | a2574 | DOI: https://doi.org/10.4102/sajems.v2i2.2574 | © 2018 J. H. van Heerden, J. N. Blignaut, N. S. Groenendijk | This work is licensed under CC Attribution 4.0
Submitted: 03 July 2018 | Published: 30 June 1999

About the author(s)

J. H. van Heerden, Department of Economics, University of Pretoria, South Africa
J. N. Blignaut, Department of Economics, University of Pretoria, South Africa
N. S. Groenendijk, University of Twente, Netherlands; and University of Pretoria, South Africa

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Abstract

This paper explains fraud from an economic point of view, using traditional economic tools and reasoning. It is shown how a supply-of-fraud function can be defined and estimated for individuals, and subsequently aggregated to derive crime rates for societies. Another approach is to explain the behaviour of fraudsters as rent-seekers, à la mode Gary Becker, and the problem of fraud may be seen as a case of market failure too. The paper also discusses some effects of fraud on society, and gives an empirical comparison between countries.

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