Fines and Financial Wellbeing

Steven Mello

The Review of Economic Studies, 2025, vol. 92, issue 5, 3340-3374

Abstract: While survey evidence suggests widespread financial fragility in the U.S., causal evidence on the implications of typical, negative income shocks is scarce. I estimate the impact of speeding fines on household finances using administrative traffic citation records and a panel of credit reports. Event studies reveal that fines averaging $195 are associated with a $34 increase in unpaid bills in collections. Given additional evidence that fine payment explains this effect and that default is the “last resort” for households, I interpret this finding as suggesting rates of inability to meet unplanned expenses which are consistent with the survey evidence. I also find that fines are associated with longer-run declines in credit scores, borrowing limits, and the likelihood of appearing as employed in payroll records covering a subset of large, high-paying employers. This impact on employment situations appears attributable to the diminished financial position of households rather than, e.g. downstream license suspensions.

Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1093/restud/rdae111 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:restud:v:92:y:2025:i:5:p:3340-3374.

Access Statistics for this article

The Review of Economic Studies is currently edited by Thomas Chaney, Xavier d’Haultfoeuille, Andrea Galeotti, Bård Harstad, Nir Jaimovich, Katrine Loken, Elias Papaioannou, Vincent Sterk and Noam Yuchtman

More articles in The Review of Economic Studies from Review of Economic Studies Ltd
Bibliographic data for series maintained by Oxford University Press ().