Fines and revenue

But punishment must by definition hurt in some way, be it emotionally, psychologically, monetarily, or physically. Punishment must cause pain. (Peter Moskos 2011, In Defense of Flogging, p.114.)

In modern legal systems fines and imprisonment are the most common penalties which can be imposed on crimes. In classic criminology three functions of punishment have been described since the 18th century: deterrence, rehabilitation and incapacitation. The latter category seeks to disable a criminal from committing another crime in the future, be it through imprisonment or execution. In case of rehabilitation, the aim of “punishment” is to reform the criminal, so he will no longer be willing to commit crimes.

It’s quite obvious that fines or monetary penalties at best can only serve as a deterrent, fines do not incapacitate or reform criminals. Additionally we could argue that fines serve a retributive aim of punishment, as expressed by the quote by Peter Moskos. However, in order to function as a deterrent a punishment should be considered by the would-be criminal as unpleasant.

Deterrence theory is not without severe criticism, but monetary penalties suffer from another “flaw” in this respective. In most legal systems fines are expressed in absolute terms, i.e. the law prescribes a fixed (maximum) sum of money to be paid for a certain offense. The problem of this is, from the perspective of deterrence, is that different people have different levels of wealth.

Suppose that a certain action, say not cleaning up your dog’s feces in public space, is punished with a fine of 50 Stella. Both Alice and Bob have a dog, and as good dog keepers they regularly walk their dogs. But Alice has a monthly income of, say, 5,000 Stella whilst Bon only earns 3,000 Stella. Assuming both person need 1,500 Stella to live from, Alice has 3,500 Stella to spend freely and Bob 1,500.

Now we know that neither of them really like to clean their dog’s feces, and being rational persons they estimate how many times they can afford to pay the fine. Alice can afford 70 fines a month and Bob only 30. Consequently Bob would be more willingly to comply with the law, because one fine constitutes a larger part of his income than it does for Alice. Basically for Alice a fine is (subjectively) cheaper than for Bob.

This example clearly shows a problem with fixed fines from the perspective of deterrence theory: people with higher incomes will be less deterred by fines. At least this would be the case if we assume that deterrence is indeed a valid concept, which is at best only partially the case. But even from a pure retributive point of view, there’s a problem: poorer people are punished more severely by fines than their more affluent fellows. Though fines might be equal to all, but their effects aren’t.

In a normal market this would not be necessarily a bad thing, only criminal law is not meant to be an ordinary market of goods and services. Certain acts are banned because they are harmful to others, and consequently no one is allowed to commit these acts regardless of their wealth. If fines should be part of our legal system, than we should equalize the effects of this kind of punishment. In other words we should make fines dependent on the income of the offender.

One method to establish income dependent fines is by introducing day-unit fines. The basic idea here is: if we put you in jail for one day, you can’t work for a day. Hence you won’t earn any income on that day. More importantly if we put a rich person or a poor person in jail for a day, the unpleasantness for both of them is more or less the same. However instead throwing people in jail, we could just as easily give them a fine equal to their income of one day.

This approach is called the day-fine or unit-fine. One unit is equal to one’s income of one day, and in the law the fine is not expressed in terms of precise monetary amounts, but in terms of such units. In our example this could be for example a fine of unit for not cleaning the feces of your dog, instead of a fine of 50 Stella.

Another important issue related to fines, what to do with the revenues raised by collecting fines? One thing would be to use this money just to fund the government, but this would lead to a perverse incentive to politicians: in order to fill their gaps they will simply resort to increasing fines, regardless of whether this would affect crime in any way.

A better proposal would be in our eyes to put this revenue in a fund for the victims of crimes. This idea is related to the concept of restorative justice. We could use this fund directly to pay financial compensation to crime victims or indirectly. A slightly different idea would be to use this money to undo the effects of crime or to use this money for crime prevention programs.