As monetary sanctions in law enforcement have become increasingly more prevalent and their budgetary significance non-trivial, little is known about why certain behavioral interventions increase compliance in some contexts but not in others, or how the effect size of nudges compares to the impact of traditional economic incentives. This study randomly increases the salience of a payment deadline, the penalties for late payment, or both, for 80,000 speeding tickets caught by an automated speed camera system near Prague, Czech Republic to identify which type of behavioral interventions can increase timely compliance for paying fines. The researchers also conducted an online survey to quantify the impact of the treatments on prior perceptions and a cost benefit analysis of increasing the salience of the treatments. Results indicated that owners often misestimate ticket deadlines and that increasing the deadline’s silence and the late penalties has a positive impact and will increase timely compliance. Increasing salience was also found to be cost-effective because it reduces the caseload of the follow-up enforcement process by administrators.
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Key Findings:
- Increasing the salience of the late penalties and the deadline with the late penalties increased timely compliance by 1.2 percent and 2.6 percent, respectively.
- Most subjects in the control group underestimate the penalty for missing the deadline, thus emphasizing the late penalty can correct the misconception.
- Survey results indicated both over-and underestimating the deadline and underestimating the penalty for missing the deadline.
- Increasing the salience of the deadline and penalty yields a net revenue gain that equals about 125 percent of the monthly labor costs of an administrator handling speed tickets.
- The fine for speeding is step-wise, and drivers receive higher fines for higher speeds; drivers ticketed at higher speeds have a lower propensity to pay their fines before the deadline.
- One percent higher fine induces a .23 percent drop in timely compliance.