The Economics of Traffic Fines

If you want to understand the average local politician’s view of voters first assume that all individuals are mindless fools. One’s that cannot react to a changing environment and sometimes must be guided or even exploited by the State’s hand. It’s this underlying belief that appears to drive the local State’s quest for revenues, in particular through the Johannesburg Metropolitan Police Department’s (JMPD) traffic fine collection process, but which like many things may also hold within it its own seeds of failure.

Almost all Johannesburg drivers are suspicious on some level of the JMPD’s motives in this regard but the question persists as to whether it is indeed economically feasible for traffic enforcement to be used as a revenue collection scheme? And if it can be how heavily can this approach be exploited?

Let’s first begin with an average individual and consider how they would behave when issued with traffic fines or even arrested. They’re likely to try to become more compliant with laws in an effort to avoid receiving additional fines, lest they spend stressful hours with their accountant working on their finances or worrisome nights sharing a prison cell with ‘Bubba’. When one person changes their behaviour this way they contribute ever so slightly to reducing the likelihood of road accidents and when a lot of individuals chose to follow this same new behaviour its beneficial effect becomes clear on a larger scale. It has to be noted at this point that this outcome would be the primary intention of traffic law enforcement for normal institutions concerned about public welfare.

As the available capacity of all such resources are exploited and even exhausted the result is likely to be suddenly exponentially escalating costs set against diminishing revenues.

Meantime the revenues collected from those traffic fines, ignoring the trauma for some from spending unwanted time with Bubba or worse yet – their accountant – would increase from zero until a peak before declining to a more stable level.  This can be observed in a common scenario where a hidden speed camera is installed on a stretch of road with a speed limit. Most motorists breaking that speed limit are initially unaware of this until they receive a fine in the post and their pockets are left a little lighter. Others will notice a bright flash at night along the same road or discover its existence by talking amongst friends. Most then learn to drive slower down that road in future even while new drivers driving on the same road have to go through this same discovery process. Of course there others are either too stubborn or even too stupid to slow down – long may they continue to lose money.

Consider though where the traffic camera is operated by a less benign institution. One where its intention is instead about earning as much money and making as much gains from the public as possible versus looking after the public welfare. This unusual institutional predatory behaviour is likely to involve increasingly harsher enforcement of laws or, in the JMPD’s case, officers actively seeking out opportunities for extracting more fines.

These would include how the JMPD has chosen to resort to variable night time speed trapping and the recurring reports of traffic officers (supposedly) accidentally enforcing incorrect speed limits or engaging in trapping that violates laws of conduct. Then there is the selective stealth enforcement of existing laws previously not considered important by the JMPD.  Add to this the aggressive use of roadblocks at peak hour traffic that negatively affect traffic flows or the JMPD’s love of selectively patrolling intersections in higher income areas: witness the officers at the Grayston and Katherine Drive intersection regularly stopping drivers of expensive cars turning onto Katherine heading towards the Sandton CBD.

Each of these examples would result in a short term growth in revenues but at some point a maximum of all possible revenues would be reached and there would have to be a decline as, among many others, the northern suburb kugels driving BMW X5’s realize they need to respect the law to not lose out on any nail manicure money. Those like minibus taxi drivers, who would otherwise drive as if the highways during rush hour are their personal runways with which to try launch themselves into the air to get to the nearest taxi rank faster, would also demonstrate they do actually know how to drive civilly.

However a traffic law enforcement agency seeking to enforce ever more laws ever more aggressively in its quest for ever more money would also not be able to escape this dreaded phenomenon of driver compliance and avoiding of fines, having to incur ever more costs to obtain those same high revenues.

Such costs would include fixed costs like officer’s salary, car maintenance and depreciation; ever more administrative costs related to paperwork, bureaucracy, AARTO requirements; and increasing overreach shown by examples like institutional losses from the fining of public hospital ambulances, opportunities for officers to solicit bribes or overlook proper serious offences, convoluted prosecution processes and growing public dissent.  As the available capacity of all such resources are exploited and even exhausted the result is likely to be suddenly exponentially escalating costs set against diminishing revenues.

One response from the JMPD would be to become even more wantonly aggressive and increasingly undertake unfair or even illegal actions against drivers but this would eventually reach a limit as well.  In any case taking all of these factors into consideration the long run effect on net revenue gains (after costs) with increasingly strict traffic enforcement might ultimately appear as shown in the graph below: initially exponentially rising rich gains, followed by a leveling off leading into a decline and eventually ending in a leveling off.

This remains an unsubstantiated theory and it does ignore the effect of other variables like per capita income, traffic congestion, public transport use and technological advancements that favour either drivers or officers among many others. But it would be interesting to determine whether its basis holds or if the economic phenomenon follows a different path.

Perhaps the decline is even steeper and the leveling off does not happen. This would be akin to when a government raises taxes increasingly higher above a 50% threshold in an attempt to try to extract the majority of citizens’ income but unwittingly encourages those same individuals to undertake less economically productive activities, ultimately resulting in less tax. In any event if the essence shown in the above graph does hold substance then it begs the question where the JMPD is on such a curve and if local ruling politicians are doomed to find out that it is they who need a guiding hand. Preferably one across their faces when it comes to their methods in trying to plug municipalities’ fiscal deficits.

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  • Faal Fitzalan

    This comparison of the different outcomes of the two postulated reasons behind the imposition of traffic fines – a ‘behaviour modifier’ with road safety as the target or – ‘revenue raising’ – just another road tax – should, perhaps, attach more weight to the impact of corruption .
    Whatever motivates the traffic fine regime is completely undermined by corruption of the kind so well reported recently, certainly in the Johannesburg and Tshwane Metros.
    Whenever an inducement is given to a Traffic Official to avoid prosecution – the traffic offence followed by the offering or extorting a bribe, and then accepting payment now adds up to three separate criminal events plus two brand new criminals of the serious variety
    Plus a loss of revenue to the Metro concerned.
    Now here’s the sting.
    The purpose behind Road Traffic Enforcement becomes immaterial , when the process is sabotaged by corruption.
    Is the present scale of corruption the reason why traffic fines have escalated so dramatically since the introduction of AARTO? Consider the new AARTO fines – they are monstrous compared to the previous scale. Have the authorities doubled or tripled up to try and cover their losses from corruption?
    Well bad news – the new fines are so horrendous that many people will be positively encouraged to offer bribes.
    We’re becoming inured to the societal disaster caused by our tenderpreneur politicians and their friends but this is a particularly invidious form of corruption because it affects ‘..ordinary people..’ and so spreads outwards into society and directly and indirectly infects us all.

  • wayne

    That’s a good point Faal. I never expanded on the thought of corruption within the traffic fine process. Offhand I would think it also lends itself to increasing the revenue maximising behaviour from authorities without being willing to actually tackle the malaise properly and directly.

    Unfortunately that’s also part of the much wider malaise of ‘forgiveness’ or tolerance for nepotism. I also just tend to sadly believe that the hard lessons democtratic and less corrupt nations learnt in the course of their histories in arriving at not being so forgiving with the corrupt and being less tolerant of nepotism from painful experiences has to be relearnt here and elsewhere too.