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Financial penalties as an alternative criminal sanction: Evidence from panel data


  • Todd Cherry


This paper explores whether financial penalties can be a viable alternative to traditional sanction methods. Given that the annual cost of operating jails and prisons is approximately $40 billion in the U.S., any increase in the efficiency of the criminal justice system will lead to substantial savings. Using a panel model to control for jurisdictional heterogeneity, results indicate that financial penalties provide a significant deterrent effect similar to those provided by other sanctions. As such, policy makers should reconsider alternative sanctions as part of a larger sentencing policy. While financial penalties are not options in all cases, the large number of nonviolent offenders currently incarcerated suggests that opportunities exist for financial punishment to reduce criminal justice expenditures. Copyright International Atlantic Economic Society 2001

Suggested Citation

  • Todd Cherry, 2001. "Financial penalties as an alternative criminal sanction: Evidence from panel data," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 29(4), pages 450-458, December.
  • Handle: RePEc:kap:atlecj:v:29:y:2001:i:4:p:450-458
    DOI: 10.1007/BF02299333

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    References listed on IDEAS

    1. Gneezy, Uri & Rustichini, Aldo, 2000. "A Fine is a Price," The Journal of Legal Studies, University of Chicago Press, vol. 29(1), pages 1-17, January.
    2. Gary S. Becker, 1974. "Crime and Punishment: An Economic Approach," NBER Chapters,in: Essays in the Economics of Crime and Punishment, pages 1-54 National Bureau of Economic Research, Inc.
    3. Block, Michael Kent & Nold, Frederick Carl, 1981. "The Deterrent Effect of Antitrust Enforcement," Journal of Political Economy, University of Chicago Press, vol. 89(3), pages 429-445, June.
    4. Chu, C. Y. Cyrus & Jiang, Neville, 1993. "Are fines more efficient than imprisonment?," Journal of Public Economics, Elsevier, vol. 51(3), pages 391-413, July.
    5. Lott, John R, Jr, 1992. "Do We Punish High Income Criminals Too Heavily?," Economic Inquiry, Western Economic Association International, vol. 30(4), pages 583-608, October.
    6. Todd Cherry, 1999. "Unobserved heterogeneity bias when estimating the economic model of crime," Applied Economics Letters, Taylor & Francis Journals, vol. 6(11), pages 753-757.
    7. Levitt, Steven D., 1997. "Incentive compatibility constraints as an explanation for the use of prison sentences instead of fines," International Review of Law and Economics, Elsevier, vol. 17(2), pages 179-192, June.
    8. Cornwell, Christopher & Trumbull, William N, 1994. "Estimating the Economic Model of Crime with Panel Data," The Review of Economics and Statistics, MIT Press, vol. 76(2), pages 360-366, May.
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    Cited by:

    1. Horst Entorf & Hannes Spengler, 2008. "Is Being 'Soft on Crime' the Solution to Rising Crime Rates?: Evidence from Germany," Discussion Papers of DIW Berlin 837, DIW Berlin, German Institute for Economic Research.
    2. Carole Billiet & Sandra Rousseau, 2014. "How real is the threat of imprisonment for environmental crime?," European Journal of Law and Economics, Springer, vol. 37(2), pages 183-198, April.

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