LEC3 - Day Fines and Nudging Flashcards
What are day fines?
Day fines are a model for systematic accounting of the financial capacity of the offender.
What is the two stages approach in calculating day fines?
- Severity of crime: number of days
- Financial capacity: the daily unit
The total (day) fine is the multiplication of these two components.
How are day fines proportionate?
Proportionality (Retributive justice)
The punishment should be proportionate to the crime (number of days) and proportionate to the income of the offender (daily unit)
Criminal sentencing should eliminate unwarranted disparities and promote
warranted disparities
- Unwarranted disparities are f.e. race and warranted disparities are f.e. income.
and Proportionality (Utilitarian Approach)
- Criminal sentencing should enhance deterrence.
- To enhance deterrence, expected costs should exceed the expected benefits of the
crime. - If the same fine is imposed on people with different incomes, utility loss and
therefore the amount of deterrence will differ per person. - day fines ‘tailor’ the punishment to achieve optimal deterrence.
What is The Law of Diminishing Marginal Utility
The Law of Diminishing Marginal Utility means that a person gets less satisfaction (utility) from each additional unit of ‘wealth
To deter, the expected costs need to exceed the expected benefits.
Same fine imposes different utility loss, but making the fine proportionate to the
income imposes equal utility loss.
What are the advantages of day fines
- Proportionality (Retributive Justice)
- Proportionality (Utilitarian)
-
Fairness
Low-income offenders are no longer punished more ‘severely’.
With traditional fines you create de facto two different sentencing systems,
imprisonment for the poor and fines for the rich.
In a day fine system, high-income offenders can no longer ‘buy’ the right to commit
offenses. -
Uniformity
Increases uniformity between sentencers, as
variation can only come from the
number of days (severity). The daily unit is ‘fixed’.
F.e. in the Netherlands, judges are asked to take income into account but there are
no set rules. Having rules for taking income into account increases uniformity
between sentences. - ** Increases the transparency and expressiveness of law**
A traditional fine does not explicitly separate the severity and capacity element, which is not very transparent.
Additionally, as the total fine can vary it does not serve as a clear signal.
In contrast, day fines can send a clear signal about the severity of the
punishment (and offense) and it is easy to see uniformity in sentencing
practices. - ** potential alternative to short
term imprisonment.**
Short-term imprisonment is harmful, as it is too short to reflect but long enough to enter the criminal world.
Day fines do not deprive the offender from a meaningful portion of their income, increasing their capacity to pay the fine instead of going to prison.
Why are Day Fines superior to other fines?
Because in an economic sense, fines need to equal the wealth of the offender.
They increase individual and general deterrence
1. Individual deterrence - discouraging an individual from engaging in
undesirable behavior by imposing costs for such behavior.
2. General deterrence - discouraging others from engaging in undesirable
behavior by imposing individual costs for engaging in such behavior.
Thus,
day fines are supior to traditional fines, as:
They impose an equal relative burden on all offenders.
The fine increases with severity.
The fine increases with wealth.
They are better for general deterrence, better for individual deterrence and better for marginal deterrence.
What is the problem with fixed fines?
A problem with fixed fines is achieving marginal deterrence (making the case for day fines stronger)
Marginal deterrence is when
undeterred individuals will have a reason to commit less rather than more harmful acts if expected sanctions rise with harm.
An individual will be deterred from committing a more harmful act owing to the difference, or margin, between the expected sanction for it and for a less
harmful act.
So how graver the offence, the more we want punishment to increase.
How are fixed fines inequal?
If we make fines equal to their harm, so making them fixed, general, individual and marginal deterrence can decrease.
If your wealth is higher than the harm, the harm is only a small percentage of your wealth, decreasing deterrence. This harms individual and general deterrence
if your wealth is lower than the imposed harm, it doesn’t matter if you
commit a more harmful offence, as you can’t pay the fine anyways. This harms
marginal deterrence.
What needs to be assessed for effective day fines?
The scope of wealth
Income taken into account cannot be zero, as you would be able to commit any crime and not receive punishment.
Upper limit on the daily unit
Limit should not be too low, otherwise rich people will not be deterred.
Access to financial information
Hard to make daily fines optimal if judges don’t have access to financial
information.
What is the Status Quo Bias?
status quo bias is the tendency to prefer the existing state of affairs under any
circumstances
This can be explained by:
1. Transaction costs: costs of switching might be high (rational explanation).
2. Loss aversion: potential losses resulting from a change are perceived as
greater in absolute terms than equivalent gains.
3. Loss aversion leads to an
endowment effect: people are more likely to retain
an object than to acquire it when they do not have it.
What is Dual Process Theory
System 1 and System 2 theory?
- The automatic system: intuitions and heuristics
- The reflective system: the more thoughtful and effortful process
Neoclassical economists believe system 1 does not exist, all decisions and judgments
operate under system 2. Behavioural economists acknowledge the existence of
both systems.
What is BIP?
Overcoming or ‘exploiting’ behavioral biases in order to improve people’s
decisions and, hence, welfare.
Substituting or complementing command-and-control regulation (bans and mandates) or economic instruments (taxes and other charges).
BIP often adhere to the philosophy of libertarian paternalism
That is the thesis that
it is legitimate to help people make better decisions themselves (through BIPs), if it is possible to do so without interfering with their liberty or autonomy.
It is paternalistic in the sense that it aims to make people better off.
It is libertarian in the sense that it tries to do so in a manner that respects people’s liberty and autonomy.
What is a nudge?
a nudge is any aspect of the choice architecture that
alters people’s behavior in a
predictable way without forbidding any options or significantly changing their economic incentives
To count as a mere nudge, the intervention must be easy and cheap to avoid.
What are defaults in nudging?
Default options are
options that are selected automatically for you unless you
make an active choice to opt out for it.
What are anchors in nudging?
You give someone an initial starting point that can influence their final answer.
Anchors work particularly well when people do not hold strong opinions on an issue.
