Fines, Non-Payment, and Revenues: Evidence from Speeding Tickets

Abstract

We estimate the effect of the level of fines on payment compliance and revenues collected from speeding tickets. Exploiting discontinuous increases in fines at speed cutoffs and reform induced variation in these discontinuities, we implement two complementary regression discontinuity designs. The results consistently document small payment responses: a 10 percent increase in the fine (i.e. the payment obligation) induces a 1.2 percentage point decline in timely payments. The implied revenue elasticity is about 0.9. Expressed in absolute terms, a one dollar increase in the fine translates into a roughly 60 cent increase in payments collected.

Keywords: Fines; Timely Payment; Speeding Tickets; Regression Discontinuity Design

JEL Classification: H27; H26; K42