Many of you are aware that I have proposed opportunity theory as a conceptual framework to help us understand the nature and reasoning behind fraud behavior. The main belief of this theory is that carriers need to focus on reducing the opportunity for fraudsters to commit fraud in as many areas as possible, thus helping to thwart efforts. Opportunity theory works on the assumption that fraudsters are rational thinkers and can cognitively assess the outcome of their actions by weighing the risks and rewards.
Jeremy Bentham and Cesear Becceria are two of the foundational minds that developed this line of criminological thinking. While at the Kilmainham Prison in Dublin, Ireland, the works of these two seminal researchers was evident as part of that prison’s reform philosophy. The prison reform movement, which began in the late eighteenth century, was founded on the root tenets of rational choice theory. Many leaders within the criminal justice community of that time, and who were devout Catholics, felt that all men were sinners and convicts could only be reformed if they were brought to repent for their deeds while in prison. Bentham believed that all prisoners were motivated by their desire to seek pleasure and avoid pain, and thus all prison reform activities should focus on environmental factors that could be controlled in this pursuit. His line of thinking can be summarized as follows (This was prominently displayed at various parts of the prison.):
Men are rational, sensory beings who judge all things in terms of pleasure and pain. It follows that man’s thoughts and behavior can be controlled through the senses. Government exists to create a system of rewards (pleasures) and punishments (pain) in a way that promotes the greatest happiness of the greatest number in society. The function of prison is to create a totally controlled environment in which deviant behavior can be remodeled or reconditioned into socially acceptable behavior. And the method to do this is to design a new kind of prison (the Panopticon, or all-seeing eye) that controls all aspects of the prisoner’s sensory experience. This includes separation cells, constant observation, and the rule of silence.
It is apparent that the idea of risk vs. reward was present in early society and was considered a reasonable method to assist us in explaining behavior. It is apparent that if we consider fraudsters as rational thinkers, then they can accurately weight the risks and rewards of engaging in deviant behavior. Reducing the opportunity to commit fraud is one method that can be taken to help skew the risk/reward balance in favor of insurance carriers.