Findings & Discussion

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In this section, we present key findings on the influence of fine amounts on offending behaviours under the Contraventions Act. For more detailed analyses of the drivers that influence an individual’s decision to offend, and the role of fine amounts, see detailed tables in the Appendix.

There are four sets of factors that determine how the fine amount will influence the three behaviours of interest (offending, challenging a fine or not, and reoffending):

Perception of Offence

How individuals perceive the act they are considering committing:

• Perceived harm and other moral beliefs related to the offence
• Perceived benefits of the offence
• Frequency of exposure to the opportunity to offend
• Ease of committing offence

Cost-benefit of taking an action (offending, challenging) vs. cost

Perception of Punishment

How individuals assess the potential consequences for their actions:

• Awareness of punishment
• Perceived fairness of punishment
• Certainty of punishment
• Severity of punishment
• Celerity (speed) of punishment

Cost-benefit of taking an action (offending, challenging) vs. cost

Environmental Factors

How social and environmental factors influence decisions to offend:

• Perceived risk of social judgment / condemnation (stigma)
• Group identity and social influences

Individual Factors

How personal characteristics / experiences influence decisions to offend:

• Socio- economic factors
• Previous experiences with offending
• Personality traits
• Personal values
• Demographics

In holistically assessing the cumulative impact of these factors, we identified five key findings:

1. Traditional economic models indicate that larger fine amounts will increase deterrence in a linear fashion.

The rational choice theory posits that a cost-benefit analysis will determine the likelihood of offence. On average, people will offend when the benefits of doing so outweigh the costs.^{Footnote 2}

The expected benefits of offending can include any perceived gains or advantages that an individual expects to derive from committing an offence – these can be monetary or non-monetary in nature, for example, cost savings from not paying a licensing fee or time savings from not having to complete an administrative process. While important to consider, expected benefits are not influenced by the size of fine amounts.

Expected costs are defined as an individual’s perception of the potential punishment they might face if they are caught and penalized for their offending behaviour.^{Footnote 3} When determining the costs of committing an offence, an individual will consider the perceived certainty (i.e., likelihood), celerity (i.e., speed), and severity (i.e., size) of the punishment.

Higher fines increase the severity component of expected costs, reducing the likelihood of offending under rational choice theory.^{Footnote 4} The certainty and celerity of the punishment mediate this influence; in other words, a higher fine amount that is administered quickly, and with more certainty, would strengthen the deterrence effect of the fine.

This theory can be applied to initial and repeat offences. However, after offending and being caught and penalized, an individual’s perception of the costs of offending are likely to increase (given an increase in their perceived certainty, severity, and possibly celerity of the punishment). According to this model, higher fines are expected to reduce the likelihood of reoffending more than an initial offence – however this has not been empirically demonstrated.

2. In practice, the relationship between fine amounts and deterrence is more complex, weaker, and contingent on the nature of the offence.

The real-world impact of higher fines on offending is much more complex than the relationship predicted by rational choice theory. Though some studies find that fine increases can significantly reduce the likelihood of offending,^{Footnote 5} others show that these increases are only effective up to a point^{Footnote 6} or not effective at all.^{Footnote 7Footnote 8} There are also instances when higher fine amounts may backfire, or increase offending behaviour. For example:

• When a fine amount is not perceived as fair or proportionate to the offence: The perceived fairness of a society’s legal system and penalties influences compliance with the law.^{Footnote 9} If an individual views higher fines as unfair or disproportionate to the offence, they may not be deterred by the penalty. This can lead to feelings of alienation and reduced compliance with the law because they do not agree or trust it.^{Footnote 10}
• When offences are seen as “normal” or “trivial”: For minor or common infractions that are widely regarded as normal or trivial, higher fines may seem excessive and unjust. This can lead to decreased respect for the law and lower overall compliance rates.
  In such cases, social norms do not support the severity of the punishment, weakening its deterrent effect. More broadly, when rules or contraventions conflict with prevailing group norms, increases in fine amounts can increase offending behaviours.^{Footnote 11} It is important to understand how the attitudes and perceptions of certain groups may respond to increase in fine amounts to assess whether they will be effective.
• When offences are repeated or habitual: Theoretically, the experience of being caught and penalized for an offence should reduce an individual’s likelihood of re-offending, especially when fines are high. While this has been seen in some studies^{Footnote 12}, others find no effect of fine severity on the likelihood of reoffence.^{Footnote 13} As fines increase, repeat offenders may even get “used” to them as a normal consequence.^{Footnote 14}

These surprising results and the overall complexity of the relationship between fine amounts and offending highlight the limitations of rational choice theory in this context. Offences committed by individuals – and to a lesser extent by organizations – are not solely, or even largely, the result of deliberate cost-benefit calculations. Instead, the decision to offend is influenced by a combination of cost-benefit analysis and contextual factors, as described earlier in this section. This underscores the need for a more nuanced understanding of the drivers of offending behaviour, integrating economic, individual, and situational variables to better predict and deter these behaviours.

While the evidence regarding the impact of higher fines on deterrence is inconclusive, certain circumstances can enhance their effectiveness. Our research identified key contextual factors (e.g., types of offences) where higher fines are likely to have a greater deterrent effect. The following should be considered by policymakers when setting fine levels:

• Maintain the current practice of assigning higher fines to offences that are more harmful or dangerous. As noted in fine-setting principles from Australia, New Zealand and Canada, higher fines are used to signal that an offence is more immoral, severe, or harmful.^{Footnote 15Footnote 16Footnote 17} When individuals recognize and agree with this signal, they are less likely to commit the offence. In addition, it is also important to clearly communicate the rationale behind higher fines to enhance public understanding of the offence’s severity, thereby increasing its deterrent effect.
• Maintain the current practice of assigning higher fines to offences that are deemed highly remunerative. Canada and New Zealand provide guidelines to issue higher fine amounts for offences with greater economic benefits.^{Footnote 18} In cases where an offender will obtain significant benefits from offending, higher costs are needed to counterbalance the higher benefits of offending.
  This is particularly relevant in a corporate context, where offences might involve substantial financial gains. In these cases, penalties are often viewed as a cost of doing business, as the perceived benefits of committing the offence outweigh the costs.^{Footnote 19} Higher fines are necessary to offset the financial incentives of non-compliance – for example, Australian corporations receive a maximum penalty five times the severity of an individual’s penalty for the same offence.^{Footnote 20} However, this threat, if perceived as a risk to an organization’s future, can lead firms to take measures to “contain” misconduct, such as reducing monitoring efforts.^{Footnote 21}
• Implement higher fines and a progressive fine structure for ‘high-opportunity-to-offend’ or repeat offences. In situations where individuals or organizations have frequent opportunities to offend, such as routine business operations or repeated environmental infractions, a progressive fine structure with higher fines may be more effective. This approach escalates fines for subsequent offences, which not only imposes stricter penalties on repeat offenders but also promotes long-term compliance as the cumulative financial risk of continued non-compliance becomes increasingly significant.

By adopting a flexible and tailored approach to fine setting that is context-specific, policymakers can better incentivize compliance and foster behavioural change across various contexts. Fines that are perceived as just, proportionate, and contextually appropriate are more likely to be effective in deterring offending behaviours.

3. The deterrence effect of higher fines can be enhanced through complementary measures

To unlock the deterrence value of higher fines, it is critical to build the necessary infrastructure that complements the fine amount itself. In many cases, the implementation of fines alone may not be enough to deter potential offenders; it is also the perception and understanding of the fines that really influences behaviour. Studies that show higher fine amounts to be effective in deterring offending behaviour, attribute this to complementary contextual factors:^{Footnote 22}

Increasing the effectiveness of fines by increasing their salience: When the potential consequences of an offence do not come readily to mind – when they are not salient – people are more likely to offend. A study involving young drivers in Australia revealed that the majority underestimated penalties (e.g., fines and demerit points) for driving-related offences. Those who underestimated the penalties perceived these punishments as less severe, possibly increasing their likelihood of offending.^{Footnote 23} On the other hand, when individuals are explicitly informed about the existence and amount of fines, offending is lower. When drivers were aware of an increase in fines, approximately half reported that this knowledge made them more cautious and vigilant about adhering to the law.^{Footnote 24}

If adopting a progressive fine structure for repeat offences, communicating the fine increase at a salient moment (e.g., when issuing a ticket or a fine, or when paying) will increase its effectiveness.

Increasing the certainty and celerity of punishment: Offenders are less likely to offend the more likely they think it is that they will be caught and fined promptly. Therefore, alongside increasing fines, enhancing visible enforcement or extending enforcement hours can increase the perceived certainty of being caught and the celerity of penalties.

Research on environmental compliance highlights the importance of enforcement in determining the effectiveness of fines.^{Footnote 25} In instances of weak enforcement, increasing either the certainty or severity of punishment was counterproductive and led to more offending behaviours. However, with robust enforcement, both components were effective in deterring offending behaviours, with certainty being particularly impactful.^{Footnote 26} In another study, public awareness of the use of camera enforcement led to fewer violations.^{Footnote 27} This highlights how increasing the visibility and efficiency of enforcement can strengthen the deterrent effect of fines.

Increasing the perceived fairness of fines: As noted above, the perceived fairness of a society’s legal system and penalties influences individuals’ intent to comply.^{Footnote 28} However, whether a higher fine or lower fine is perceived to be fair/unfair is unclear in general. We hypothesize that in most cases, smaller fines will feel fairer, but not when the perception of moral harm is high.

To enhance perceived fairness, it is important to ensure that fine structures are transparent and consistently applied across all individuals and cases. When these amounts are deemed fair, policymakers should communicate the rationale behind higher fine amounts to help individuals understand their harm.

Communicating the risk of social judgment when setting fine amounts: As higher fines may signal that an offence is immoral or harmful, they may in turn increase the perceived social condemnation associated with the higher amount. A Canadian study reveals that observers draw more negative inferences about an individual’s propensity for wrongdoing when the legal penalties for a crime are higher compared to when they are lower.^{Footnote 29}

As social judgment can effectively deter offending behaviours within a community, policymakers should use levers such as publicly administered penalties and messaging about social norms to encourage the acceptance of fine amounts.

4. Higher fines can undermine equity.

Fining practices often disproportionately harm vulnerable individuals based on race, gender, disability, or other protected statuses.^{Footnote 30} For fines to effectively deter, the offender needs to have the resources to pay the resulting fine or the ability to acquire them.^{Footnote 31} This highlights the need to address equity concerns in the design of fine systems.

Effectively addressing equity considerations does not mean reducing fees across the board. More innovative, multifaceted approaches are available. Many jurisdictions have a framework that considers ability to pay when setting fine amounts. This approach aligns with principles in Canada, as well as Australia, New Zealand, and the United Kingdom, where cost-of-living considerations play a role in determining fine levels. In addition, means tested or income-based fines, currently seen in some European countries such as Finland and Switzerland, ensure that fines are proportionate to an individual’s financial situation, maintaining the deterrent effect without imposing undue hardship.^{Footnote 32}

Complementing fines with alternative or additional penalties can promote more equitable deterrence strategies by matching punishment to the capacity and circumstances of individuals. Community service, educational programs, and rehabilitation initiatives offer more holistic approaches to addressing offending behaviors, particularly for first-time offenders. These interventions not only serve as meaningful deterrents but also contribute to the broader goal of promoting rehabilitation and reducing recidivism. By adopting these strategies, policymakers can strike a balance between deterrence and equity, ensuring that fine systems are both effective and fair.

5. Higher fines are more likely to be challenged, but there is no data on the exact relationship.

From a rational choice theory perspective, higher fines are more likely to be challenged. People will have more to gain from challenging a fine when the fine is larger. Even where people are not making cost-benefit calculations, the emotional reaction to a fine is greater when the fine is larger, possibly increasing desire to challenge it.^{Footnote 33}

Unfortunately, our research did not uncover any empirical data on this relationship. We do not know if this is merely a theoretical tradeoff or if there is a direct and consistent relationship. We recommend either analyzing non-public, administrative data to understand the tradeoff quantitatively, or conducting a trial to measure it.

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