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The Optimal Use of Fines and Imprisonment

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Author Info
A. Mitchell Polinsky
Steven Shavell

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Abstract

This paper examines the use of fines and imprisonment to deter individuals from engaging in harmful activities. These sanctions are analyzed separately as well as together, first for identical risk-neutral individuals and then for two groups of risk-neutral individuals who differ by wealth. When fines are used alone and individuals are identical, the optimal fine and probability of apprehension are such that there is some "underdeterrence." If individuals differ by wealth, then the optimal fine for the high wealth group exceeds the fine for the low wealth group. When imprisonment is used alone and individuals are identical, the optimal imprisonment term and probability may be such that there is either underdeterrence or overdeterrence. If individuals differ by wealth, the optimal imprisonment term for the high wealth group may be longer or shorter than the term for the low wealth group. When fines and imprisonment are used together, it is desirable to use the fine to its maximum feasible extent before possibly supplementing it with an imprisonment term. The effects of risk aversion on these results are also discussed.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 0932.

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Date of creation: Jul 1982
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Publication status: published as Polinsky, A. Mitchell and Steven Shavell. "The Optimal Use of Fines and Imprisonment." Journal of Public Economics, Vol. 24, (1984), pp. 89-99.
Handle: RePEc:nbr:nberwo:0932

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  1. Gary S. Becker, 1968. "Crime and Punishment: An Economic Approach," Journal of Political Economy, University of Chicago Press, vol. 76, pages 169. [Downloadable!] (restricted)
  2. Polinsky, Mitchell & Shavell, Steven, 1979. "The Optimal Tradeoff between the Probability and Magnitude of Fines," American Economic Review, American Economic Association, vol. 69(5), pages 880-91, December. [Downloadable!] (restricted)
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  3. A. Mitchell Polinsky, 1981. "Private versus Public Enforcement of Fines," NBER Working Papers 0338, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Ayse Imrohoroglu & Antonio Merlo & Peter Rupert, 2006. "Understanding the determinants of crime," Working Paper 0602, Federal Reserve Bank of Cleveland. [Downloadable!]
  2. Langlais, Eric, 2006. "Criminals and risk attitude," MPRA Paper 1149, University Library of Munich, Germany, revised 15 Sep 2006. [Downloadable!]
  3. Mohamed Jellal & Nuno Garoupa, 1999. "Dynamic Optimal Law Enforcement with Learning," Economics Working Papers 402, Department of Economics and Business, Universitat Pompeu Fabra. [Downloadable!]
  4. Johann Graf Lambsdorff & Mathias Nell, 2007. "Fighting Corruption with Asymmetric Penalties and Leniency," Center for European, Governance and Economic Development Research (cege) Discussion Papers 59, Center for European, Governance and Economic Development Research, University of Goettingen (Germany).. [Downloadable!]
  5. Ayse Imrohoroglu & Antonio Merlo & Peter Rupert, 1996. "On the political economy of income redistribution and crime," Working Paper 9609, Federal Reserve Bank of Cleveland. [Downloadable!]
    Other versions:
  6. Philip A. Curry & Steeve Mongrain, 2007. "What You Don't See Can't Hurt You: An Economic Analysis of Morality Laws," Discussion Papers dp07-05, Department of Economics, Simon Fraser University. [Downloadable!]
    Other versions:
  7. Gerrit de Geest & Giuseppe Dari-Mattiacci, 2005. "Soft Regulators, Though Judges," Working Papers 05-06, Utrecht School of Economics. [Downloadable!]
  8. Antonio Merlo, 2001. "The Research Agenda: Dynamic Model of Crime and Punishment," EconomicDynamics Newsletter, Review of Economic Dynamics, vol. 2(2), April. [Downloadable!]
  9. Anna Rita Germani, 2007. "The Environmental Enforcement in the Civil and the Common Law Systems. A Case on the Economic Effects of Legal Institutions," Quaderni DSEMS 22-2007, Dipartimento di Scienze Economiche, Matematiche e Statistiche, Universita' di Foggia. [Downloadable!]
  10. Sverre Grepperud, 2007. "Optimal Prevention when Informal Penalties Matter: The Case of Medical Errors," Contributions to Economic Analysis & Policy, Berkeley Electronic Press, vol. 7(1), pages 1612-1612. [Downloadable!] (restricted)
  11. Daniel Kessler & Steven D. Levitt, 1998. "Using Sentence Enhancements to Distinguish between Deterrence and Incapacitation," NBER Working Papers 6484, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  12. Steven Levitt, 2002. "Testing the Economic Model of Crime:The National Hockey League's Two-Referee Experiment," Contributions to Economic Analysis & Policy, Berkeley Electronic Press, vol. 1(1), pages 1014-1014. [Downloadable!] (restricted)
  13. Nuno Garoupa & Hugh Gravelle, . "Does Efficient Deterrence Require that the Wealthy Should Be Able to Buy Justice?," Discussion Papers 00/07, Department of Economics, University of York. [Downloadable!]
  14. Steven D. Levitt, 1995. "Why Do Increased Arrest Rates Appear to Reduce Crime: Deterrence, Incapacitation, or Measurement Error?," NBER Working Papers 5268, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  15. Dominique Demougin & Stephane Pallage, 1999. "Society Versus Jury: A Case for Limiting Behavior," Cahiers de recherche du Département des sciences économiques, UQAM 9907, Université du Québec à Montréal, Département des sciences économiques. [Downloadable!]
  16. Dominique Demougin & Stephane Pallage, 2000. "Limiting Court Behavior: A Case for High Minimum Sentences and Low Maximum Ones," Cahiers de recherche CREFE / CREFE Working Papers 101, CREFE, Université du Québec à Montréal. [Downloadable!]
    Other versions:
  17. A. Mitchell Polinsky & Steven Shavell, 1991. "A Note on Optimal Fines When Wealth Varies Among Individuals," NBER Working Papers 3232, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  18. Jose Meade & Joel Waldfogel, 1998. "Do Sentencing Guidelines Raise the Cost of Punishment?," NBER Working Papers 6361, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  19. A. Mitchell Polinsky, 2004. "The Optimal Use of Fines and Imprisonment When Wealth is Unobservable," NBER Working Papers 10761, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  20. A. Mitchell Polinsky & Daniel L. Rubinfeld, 1986. "A Note on Optimal Public Enforcement with Settlements and Litigation Costs," NBER Working Papers 2114, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  21. Nuno Garoupa, 2000. "Optimal Magnitude and Probability of Fines," Economics Working Papers 454, Department of Economics and Business, Universitat Pompeu Fabra. [Downloadable!]
    Other versions:
  22. Roger H. Gordon & John D. Wilson, 1999. "Tax Structure and Government Behavior: Implications for Tax Policy," NBER Working Papers 7244, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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