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Improving payment of traffic fines with financial incentives: Discounts versus penalties

Author

Listed:
  • Sophia du Plessis

    (Department of Economics, Stellenbosch University)

  • Bjoern Hartig

    (Royal Holloway, University of London)

  • Ada Jansen

    (Department of Economics)

  • Krige Siebrits

    (Department of Economics, Stellenbosch University)

Abstract

The effective enforcement of traffic laws is critical for improved road safety outcomes. Decisions to follow traffic rules and pay fines are influenced by formal institutions (e.g. laws, court summons, and fines) as well as informal institutions (e.g. norms and aspects of culture). Formal and informal institutions create incentives that should be designed to steer individuals’ behaviour towards desired outcomes. Unfortunately, there is no reason to believe that the institutions to deal with traffic violations in South Africa currently create effective incentives. This paper discusses the findings of a controlled laboratory experiment that tested the efficacy of different financial incentives which may influence the payment of traffic fines. An early payment discount similar to the incentive under AARTO was compared to a late payment penalty (used in other countries, for example, some states in the USA), and to the absence of any incentives. Furthermore, we examined whether the willingness to settle fines is sensitive to the likelihood of detection by the authorities. We found that introducing financial incentives significantly increases voluntary payment of fines, irrespective of whether immediate payment is encouraged with a discount or late payment is discouraged with a surcharge. In addition, subjects are more sensitive to the likelihood of detection when financial incentives are present.

Suggested Citation

  • Sophia du Plessis & Bjoern Hartig & Ada Jansen & Krige Siebrits, 2019. "Improving payment of traffic fines with financial incentives: Discounts versus penalties," Working Papers 18/2019, Stellenbosch University, Department of Economics.
    • Handle: RePEc:sza:wpaper:wpapers332
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    File URL: https://www.ekon.sun.ac.za/wpapers/2019/wp182019/wp182019.pdf
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    References listed on IDEAS

    as
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    Cited by:

    1. Jason Bantjes & Sophia du Plessis & Ada Jansen & Krige Siebrits, 2021. "Better enforcement is essential, but may be inadequate: Findings of a survey on the factors affecting payment of speeding fines in Cape Town, South Africa," Working Papers 03/2021, Stellenbosch University, Department of Economics.
    2. Jason Bantjes & Sophia du Plessis & Ada Jansen & Krige Siebrits, 2021. "Better Enforcement Is Essential, but May Be Inadequate: Findings of a Survey on the Factors Affecting Payment of Speeding Fines in Cape Town, South Africa," Sustainability, MDPI, vol. 13(9), pages 1-16, April.

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    More about this item

    Keywords

    Traffic laws; law enforcement; South Africa; laboratory experiments; human behaviour;
    All these keywords.

    JEL classification:

    • B52 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Historical; Institutional; Evolutionary; Modern Monetary Theory;
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • D04 - Microeconomics - - General - - - Microeconomic Policy: Formulation; Implementation; Evaluation
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • L91 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Transportation: General
    • L98 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Government Policy

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