Noisy law: Scaling without a modulus

Sometimes legal systems are “noisy”; they show unjustified variability or “scatter,” which means that what emerges is likely to be unpredictable and unfair. Potential examples include assessment of whether a risk is “significant” or “unreasonable,” fines for environmental harms or safety violations, compensatory damage awards for libel, pain and suffering, hedonic losses, and sexual harassment, and punitive damage awards for corporate wrongdoing. To understand why and when law is noisy, it is useful to note that psychologists commonly distinguish between two kinds of scales: category scales and magnitude scales. Category scales are bounded and anchored in verbal descriptions at specified points. By contrast, magnitude scales are unbounded and defined by a meaningful zero point. In some settings, money might operate as a magnitude scale. For purposes of policy and law, here are the two key psychological findings. First, judgments on magnitude scales are often highly variable, or noisy, when there is no “modulus” to define the various points. The variability occurs even when there is no reason to believe that people actually disagree about anything meaningful. Second, distributions of judgments are “positively skewed,” with a long right tail. People involved in law and policy often use magnitude scales, above all money. High levels of noise, and susceptibility to bias (especially from anchors), are likely results. This is the problem of “noisy law,” an insufficiently explored area of behavioral public policy. Theories of optimal deterrence might help to reduce noise, but many policymakers, and many people involved in law and policy, do not accept those theories.