What is the relationship between crime and punishment? This important question has been examined by Cornwell and Trumbull \({ }^{16}\) using a panel of data from North Carolina. The cross sections are 90 counties, and the data are annual for the years 1981-1987. The data are in the file crime.

Using the data from 1986, estimate a regression relating the log of the crime rate LCRMRTE to the probability of an arrest PRBARR (the ratio of arrests to offenses), the probability of conviction PRBCONV (the ratio of convictions to arrests), the probability of a prison sentence PRBPRIS (the ratio of prison sentences to convictions), the number of police per capita \(P O L P C\), and the weekly wage in construction WCON. Write a report of your findings. In your report, explain what effect you would expect each of the variables to have on the crime rate and note whether the estimated coefficients have the expected signs and are significantly different from zero. What variables appear to be the most important for crime deterrence? Can you explain the sign for the coefficient of POLPC?