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.

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  1. c says:

    So all the judge has to do is lie about the amount of the fine and they can collect?

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    • Steve O says:

      The judge chooses the amount of the fine, and opts for a higher amount than he otherwise would have.

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  2. Hamed says:

    This sort of thing is very common in the UK for fixed-penalty offences (e.g. speeding or parking tickets). The full penalty might be for £80, but will only be £40 if you pay within 14 days. This not only encourages people to pay quickly, but discourages them from appealing against the penalty.

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    • RogerP says:

      The same is being introduced in South Africa, but already codified in the statute: no input from a judge. Payment within 30 days gets you a 50% discount on the fine.

      Nonpayment of fines is a huge problem in this country. They tried withholding vehicle licences on renewal if there were outstanding fines, but I know several people with substantial outstanding fines who renew every year with no trouble.

      The incentive to appeal comes from the number of demerit points that also accompanies the offence.

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  3. Brian1625 says:

    I’ve noticed they started doing this for those that don’t have insurance for medical expediences. They cut about 200 $ off my final price if I paid the full cost on the way out the door.

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  4. Stone says:

    I see fine reduction (or future fine increase) frequently as an incentive to pay traffic tickets, etc.. But what’s described here isn’t fine reduction as an incentive, it’s lying from the bench. I can’t believe this is legal. It certainly isn’t acceptable. When judges start lying routinely, we’re all in serious trouble.

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    • pawnman says:

      I was curious about this as well…but is the judge lying, or does the judge have the authority to set the fine amount? I know for some fines, like many traffic tickets, it is a set scale. Surely there are other fines where the judges have the discretion to adjust the cost.

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    • JBP says:

      Neither of us knows the law in this case, but Judges typically have a lot of authority when it comes to penalties. They usually can suspend a part of the penalty. He is not lying if he will in fact revoke the suspension and impose a higher penalty.

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  5. Eric M. Jones. says:

    Hidden due to low comment rating. Click here to see.

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  6. m.m. says:

    OK, I’ll ask the dumb question. Why is it “lying from the bench”? I assume there is a fine for the offense listed in the statute law. The judge orders the offender to pay that. The judge also may realize that the offender is not going to be able to pay that. So the judge also strikes a deal with the offender to pay a lesser amount, in the hopes that the offender will pay at least SOME of the fine.

    Where is the lie? Deals are struck all the time in court. Unless there is some minimum sentencing law in place (i.e., law says judge CANNOT give less than the mandated sentence, be it fine or years in jail), I don’t see the problem.

    Unless you are all saying that the statutory fine in the books is actually only $500, but the judge lies to the offender and says it is really $1000, and he’ll give the offender a “deal” by cutting it to $500. Yes, that would be wrong. But I see no evidence of that from the above story.

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    • Imad Qureshi says:

      From the post:

      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.”

      How is this not an evidence that the judge is lying?

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      • J says:

        It’s hard to say what sort of specific cases our lawyer friend is talking about, but in the state most of my speeding tickets came from, the fine is fixed only if you plead guilty or no contest. If you go to court (an insanely bad idea), for practical purposes judge can do whatever the hell he wants, including substantial fine increases and other conditions. It’s unlikely the judge was lying; he almost certainly has the authority to impose a higher fine if the defendant takes too long to pay.

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  7. m.m. says:

    Rats. Never mind. I missed that 2nd sentence, “Suppose the fine is $500.” Yep. That’s wrong.

    Now, if he was ACTUALLY settling for less than the statutory fine, I have no problem with that. Settlements happen all the time in court (witness the recent Mortgage Fraud settlement). It’s all a cost-benefit analysis.

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  8. frankenduf says:

    doesn’t the IRS do this as well?

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    • Danny Dye says:

      The ads on TV are very misleading. My experience working with clients and the IRS has taught that they seldom take a discounted amount. The only exception being a client who has no assets and very poor prospects of ever being able to pay. If you have a job or own any assets, a discount is not negotiable.

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