Monday, December 25, 2006

Penalising drunks who kill

More interesting analysis from the law and economics, Becker-Posner blog. This time B-P address drink driving penalties. I like this blog so much because it addresses significant issues of social importance using the sort of economics any well educated person can understand.

Gary Becker estimates that the cost per drunk driver arrested of drunk driving in the US is about $10,000. This is the order of magnitude he asserts should be levied as ex ante fines on drunk driving – or the ‘equivalent’ in license suspension costs or imprisonment. He argues that such hefty penalties would reduce the scale of alcohol-induced deaths on US roads to the levels of European countries where very heavy penalties are standard.

Richard Posner responds that the Becker ex ante penalties makes sense only if the theoretically more sound proposal of penalizing ex post those drivers who do kill an innocent by the cost of the innocent’s life fails to deter drink-driving deaths. He estimates the value of a statistical life at $7 million so, if 10% of drink driving offenders fail to be convicted, he argues that any driver convicted of killing an innocent should be penalized $7/0.9 = $7.8 million.

The case for ex post penalties is hardly convincing to me. Although it is true that most drink driving does not involve the death of an innocent party, motorists exaggerate the extent to which they can manage risk-less driving when drunk. The general point of each author’s analysis however is that the external costs of drink driving are huge.

It would be a simple matter – and I might do it myself as a 2007 New Year’s resolution – to compute the optimal scale of penalties in Australia (from ex post and ex ante perspectives) for drink driving. Penalties here are currently higher than the US. Compared to the US where 40% of road accident fatalities involve drunkenness the figure in Australia is ‘only’ 31%. But still the Australian courts are increasingly reluctant to imprison even repeat drink-driving offenders and sentences for killing innocents on the road are often pathetically small.


Concerned Australian said...

Hmmm, Harry. The Becker and Posner guys you so admire are pro death penalty, Posner in a seriously psycho way. Is this an example of there 'simple analysis that any educated adult can understand??'

hc said...

Dear CA, They support it on the grounds that it is an effective deterrant. My view is that, regardless of effectiveness we should not use capital punishment.

Of course these issues do not arise here in relation to their proposed punishments for alcohol-induced accidental deaths.