Source: (1999) TMs (online). Ann Arbor, MI: University of Michigan.In recent decades, efforts have been made to recognize the rights and needs of victims in the criminal justice process. One way to address the rights and needs of victims is compensation. In certain instances, laws provide for financial redress of loss suffered by a victim, either through state-funded compensation or through restitution paid by the offender. The authors of this paper analyze the financial effects of compensation schemes. They maintain that compensation schemes are socially desirable because they could reduce the social cost of crime. The social cost of crime consists not only of losses experienced by actual victims, but also the considerable amounts spent on crime-prevention measures by those who are only potential victims. The authors contend that compensation schemes could reduce investment in crime-prevention measures by giving people a reasonable expectation of being compensated should they someday experience loss due to crime.