Fines and Financial Wellbeing


 For every $195 in fines, unpaid bills in collections increase by $34.

Unplanned financial shocks can have long-term effects on household finances. This article explores whether households can absorb unanticipated shocks by estimating the impacts of fines for traffic violations on household financial situations. The author analyzes administrative data from speeding citations issued in Florida from 2011 to 2015, monthly credit reports from January 2010 to December 2017, and payroll records to identify the impact of financial stress. The findings show fines are associated with increased financial distress, a decline in credit reputation, and reduced employment stability, suggesting that, on average, households cannot easily absorb typical and unplanned expense shocks. Additionally, the findings highlight racial disparities, indicating that Black and Hispanic households are particularly vulnerable to larger fines.

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Key Findings:

  • 30 to 60 percent of households default on other bills after a  $200 fine.
  • Black and Hispanic individuals experienced 50 percent more debt in collections than white individuals.
  • Individuals experienced an eight percent decline in the likelihood of appearing employed in a payroll records database from large employers who cover about one-quarter of total employment in Florida.
  • Three years after the traffic stop, credit scores and borrowing limits are 2.6 percentage points and $330 lower, respectively.
Steven Mello