Improving payment of traffic fines with financial incentives: Discounts versus penalties

Sophia Du Plessis (), Bjoern Hartig (), Ada Jansen () and Franz Siebrits
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Sophia Du Plessis: Department of Economics, Stellenbosch University
Bjoern Hartig: Royal Holloway, University of London
Ada Jansen: Department of Economics

No 18/2019, Working Papers from Stellenbosch University, Department of Economics

Abstract: The effective enforcement of traffic laws is critical for improved road safety outcomes. Decisions to follow traffic rules and pay fines are influenced by formal institutions (e.g. laws, court summons, and fines) as well as informal institutions (e.g. norms and aspects of culture). Formal and informal institutions create incentives that should be designed to steer individuals’ behaviour towards desired outcomes. Unfortunately, there is no reason to believe that the institutions to deal with traffic violations in South Africa currently create effective incentives. This paper discusses the findings of a controlled laboratory experiment that tested the efficacy of different financial incentives which may influence the payment of traffic fines. An early payment discount similar to the incentive under AARTO was compared to a late payment penalty (used in other countries, for example, some states in the USA), and to the absence of any incentives. Furthermore, we examined whether the willingness to settle fines is sensitive to the likelihood of detection by the authorities. We found that introducing financial incentives significantly increases voluntary payment of fines, irrespective of whether immediate payment is encouraged with a discount or late payment is discouraged with a surcharge. In addition, subjects are more sensitive to the likelihood of detection when financial incentives are present.

Keywords: Traffic laws; law enforcement; South Africa; laboratory experiments; human behaviour (search for similar items in EconPapers)
JEL-codes: B52 C91 D02 D04 K42 L91 L98 (search for similar items in EconPapers)
Date: 2019
New Economics Papers: this item is included in nep-exp, nep-law and nep-tre
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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