The Scope of Punishment: An Economic Theory of Harm-Based vs. Act-Based Sanctions
21 Pages Posted: 29 Dec 2006
Date Written: October 2006
The harm caused by many acts is not certain but probabilistic. Current public enforcement of the law combines harm-based sanctions (usually in criminal law) with act-based sanctions (very common in administrative law and regulation). We propose an economic theory of the choice between harm-based and act-based sanctions in public enforcement. The efficiency of act-based versus harm-based sanctions is analyzed and a typology of the determinants is drawn up. In the simple model with risk neutral offenders, both legal policies have the same deterrent level, but act-based sanctions end up punishing more people and the sanctions are lower. However when the assessment of the probability of harm diverges across individuals, the choice between harm-based or act-based sanctions depends on whether it is the enforcer or the average individual who is better informed. Legal policy implications are discussed.
Keywords: Harm-based sanction, act-based sanction, uncertain harm
JEL Classification: K4
Suggested Citation: Suggested Citation