Why fines?

Presume we have a law to enforce. The contents of the law are not an issue, just the enforcement. Also presume we are to maximize the sum total of societal welfare, without regard for distributional issues (i.e. we are utilitarians). How should we go about the task?

The first task is to enumerate the costs of associated with enforcement. Some costs involved in enforcing a law include:

• running costs incurred on the justice system by the existence of the law
• the costs of solving a crime, or police work
• the costs of public adjucation
• costs incurred when carrying out a punishment
• private costs of enforcement to a perpetrator
• the possible social costs due to a perpetrator not being able to interact normally with other people
• the cost of incorrect adjudication to the falsely claimed
• increased uncertainty and preparedness in the face of false verdicts
• any remunerable costs incurred on the victim when a law is broken; these break down to:
  • full restitution, recoverable from the perpetrator and payable to those who were harmed
  • the portion of full restitution not recoverable from the perpetrator because he was not caught, but still measurable in money, per se
  • treatment for injuries
  • the going rate for irreparable injury, pain, emotional damage and death, estimated statistically from people’s willingness to pay in order not to be faced with these otherwise
  • interest on the above
• any unremunerable costs incurred on the victim when a law is broken; these break down to:
  • the consumer surplus on irreparable injury, pain, emotional damage and death
  • the loss of volition
• costs to the society at large of a crime; these break down to:
  • the cost of increased uncertainty in the face of increased crime
  • the costs of privately arranged extra deterrence
  • insurance costs
  • prepayments towards alleviating the irreparable damage possibly incurred (e.g. inverse insurance)
• the costs and benefits due to returns to scale in fighting crime