Gary Becker famously applied economic thinking to whole areas of activity that lie beyond the realm of narrow economic transactions. One such area is crime. The prevailing thinking of the day was that criminal activity derived from mental aberration or from social repression, and might be tackled by measures to improve mental health or to upgrade social conditions. In his paper "Crime and Punishment – An Economic Approach" (1968) and in subsequent publications, Becker advanced the alternative view that criminals were basically rent-seeking, trying to secure more of the resources that others produced instead of contributing to economic growth themselves. He posited that criminals are rational, performing a kind of cost-benefit analysis in which they set the gains they stand to make from a crime against the likelihood of being caught and facing a penalty.

Society can alter that cost-benefit equation in two ways, by increasing the likelihood of detection, or by increasing the penalties faced upon conviction. Increased police presence is by far the costlier of the two options, while jacking up the penalties can be relatively less costly to do.

Becker's insights have altered the way in which authorities tackle crime. Zero tolerance, for example, proposes that pursuit of minor offences ("broken windows") can create a climate in which potential criminals feel they are more likely to be caught. The use of CCTV to identify criminals by recording them in the act is similarly intended to raise the stakes of crime by making its detection seem more likely. On the other side of the equation the use of longer prison sentences also increases the costs that the potential criminal has to set against the benefits.

It was entirely typical of Becker, and part of his great contribution, that he took economics out from the economy itself and into the activities and relationships in society at large. Crime was one such area.