How Do People React to Income-Based Fines? Evidence from Speeding Tickets Discontinuities
Martti Kaila
No 11064, CESifo Working Paper Series from CESifo
Abstract:
This paper studies the impact of income-based criminal punishments on crime. In Finland, speeding tickets become income-dependent if the driver’s speed exceeds the speeding limit by more than 20 km/h, leading to a substantial jump in the size of the speeding ticket. Contrary to predictions of a traditional Becker model, individuals do not bunch below the fine hike. Instead, the speeding distributions are smooth at the cutoff. However, I demonstrate that the size of the realized speeding ticket has sizable but short-lived impacts on reoffending ex-post. I use a regression discontinuity design to show that fines that are 200 euros larger decrease reoffending by 15 percent in the following six months. After 12 months, the effect disappears. My empirical results are consistent with an explanation that people operate under information frictions. To illustrate this, I construct a Becker model with misperception and learning that can explain all the empirical findings.
Keywords: deterrence; learning; optimization frictions; regression discontinuity design; income-based fines (search for similar items in EconPapers)
JEL-codes: D83 K40 K42 (search for similar items in EconPapers)
Date: 2024
New Economics Papers: this item is included in nep-eur, nep-law and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_11064
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