Has America's 25 year "war on crime" made rational criminals think twice about commiting crime from or is/are there some other reason(s) why crime rates have dropped?

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There is no way to provide an objectively true answer to this question.  It is simply a matter of opinion.  We cannot identify people who would have committed crimes in the past but did not do so today to ask them why they did not commit crimes.  Therefore, we can only speculate.

It seems unlikely that harsh punishments have raised the “costs” of crime enough to deter potential criminals.  Crime has continued throughout the ages, even when most crimes carried the death penalty.  Clearly, there are things other than punishment that determine the level of crime.

Let us suggest a few things that might have helped to reduce crime levels.  First, there have been high-profile changes in policing tactics, most notably in places like New York City.  The “broken windows” policy of cracking down on small crimes may have changed the atmosphere in certain neighborhoods, thus making crime seem less appealing.  Second, there have been demographic changes.  We know that most crime is committed by young men.  If there is a smaller cohort of men in the age range that typically commits crimes, we could expect to see a reduction in the crime rate. 

These are two possible factors that could have contributed to the decline in crime.

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