Tiny brain: We should punish Zuckerberg for speeding! That'll show him!
Normal brain: Wait a minute. Increasing fines for the 1% can solve at most 1% of the speeding problem. Okay, the 1% number is polemical, but any solution to the problem of speeding must fall mostly on poorer people, because they are the majority.
Glowing brain: Why do we talk about speeding as a crime? Any economist would tell you that the optimal amount of speeding is nonzero, so it should be solved with a Pigovian tax equal to the negative externality. Since a rich speeding person does as much potential damage as a poor speeding person, the fine shouldn't depend on how rich you are. If you want a safety net, build a safety net, don't muck around with speeding fines.
Galactic brain: Is speeding that much of an externality though? If you go fast and cause a crash, you bear about half of the cost. If you don't cause a crash, no one bears the cost. It's not like pollution where the polluter bears a millionth of the cost. So it seems like selfish decision making, with average human level of loss aversion, should already deal with the problem of speeding. Why isn't that happening?
Buddha brain: People know the cost of a crash. Speeding happens because people misjudge the risk of a crash. So perceived risk, not cost, is the right variable to tweak if you want to fix speeding. Make enforcement of fines much more fast and certain, and you can solve speeding while lowering fines. The whole article about billionaires was a distraction from a distraction from a distraction.
"Make enforcement of fines much more fast and certain, and you can solve speeding while lowering fines."
If "solve" means legitimize it, yes, you've solved it.
Google for "daycare fine study" and notice that adding a small but significant fine to a behaviour you wish to discourage increased that behaviour rather than decreasing it.
The fine shouldn't be that low. Here's the best formula I could figure out.
Let's say R1 = actual risk of harm to yourself and others, M1 = magnitude of harm to yourself and others, R2 = your perceived risk of harm to yourself, M2 = magnitude of harm to yourself. Both M1 and M2 should be based on market price of QALY (about 50K dollars?) without overvaluing you specifically. Then the fine should be set at R1⋅M1-R2⋅M2.
That's a generalization of Pigovian tax to a spectrum of behaviors: pollution (R1=R2, M1>M2), skipping medical checkups (R1>R2, M1=M2), speeding (R1>R2, M1>M2). Does that make sense?
"Increasing fines for the 1% can solve at most 1% of the speeding problem."
Incorrect. 1% on the income distribution is not necessarily 1% on the speed offenders pool. But I guess that is, nevertheless, an accurate thought model for "normal brain" :)
Normal brain: Wait a minute. Increasing fines for the 1% can solve at most 1% of the speeding problem. Okay, the 1% number is polemical, but any solution to the problem of speeding must fall mostly on poorer people, because they are the majority.
Glowing brain: Why do we talk about speeding as a crime? Any economist would tell you that the optimal amount of speeding is nonzero, so it should be solved with a Pigovian tax equal to the negative externality. Since a rich speeding person does as much potential damage as a poor speeding person, the fine shouldn't depend on how rich you are. If you want a safety net, build a safety net, don't muck around with speeding fines.
Galactic brain: Is speeding that much of an externality though? If you go fast and cause a crash, you bear about half of the cost. If you don't cause a crash, no one bears the cost. It's not like pollution where the polluter bears a millionth of the cost. So it seems like selfish decision making, with average human level of loss aversion, should already deal with the problem of speeding. Why isn't that happening?
Buddha brain: People know the cost of a crash. Speeding happens because people misjudge the risk of a crash. So perceived risk, not cost, is the right variable to tweak if you want to fix speeding. Make enforcement of fines much more fast and certain, and you can solve speeding while lowering fines. The whole article about billionaires was a distraction from a distraction from a distraction.