Two Ways to Make Them Pay
A reader, who is also a lawyer, writes in with an interesting example of incentives in the courtroom. He tells us about a particular judge in New Hampshire, who developed a strategic approach to collecting fines:
I thought you might be interested in this little experiment in economics. People cannot be sent to jail, under the Constitution, for being poor — i.e., being unable to pay their fines. They can be sent to jail if they “willfully refuse” to pay. In order to find someone is doing that, the judge must hold a long and complex hearing. As a result, people are rarely found to have willfully refused to pay. Instead, the judges have come up with dozens of work-arounds — time payments, delayed pleas to gather the money, community service. None of these work on a regular basis.
One judge, however, has a great solution. He offers them a fine “sale.” Suppose the fine is $500. He will tell them “the fine is $1,000, but if you pay within the next two weeks, we will accept $500.” In my thousands of cases and eight-plus years, no one has ever failed to pay under that scenario. And it requires no administrative costs like the others do, no extra hearing…nothing. Perfect example of a study in incentives, right? Leave it to those old, smart, practical Yankee judges in small town NH to solve this intractable problem.
Meanwhile, the New York Post reports that in the court of child support, officials are also taking a new approach to collecting payments:
Officials reported collecting a record $731 million in child-support payments last year, up about 4.5 percent, and part of the reason was that the city adopted a customer-friendly approach toward some parents who haven’t been paying up. Some received counseling, others job preparation skills — a far cry from the usual threats of legal action and possibly jail time.