Learning from Law Enforcement

The presented paper studies how exposure to punishment shapes future compliance behavior. The context of our study is the enforcement of speed limits through "radars" and speeding tickets. Using unique data on driving and ticketing histories that track more than one million cars over almost 4 years, we evaluate drivers' responses to tickets. Tickets do not affect future "price" for speeding (expected fines, insurance rates, etc.). Hence, there is no scope for general deterrence. However, drivers might learn from their enforcement experiences and accordingly adjust their behavior. We present two empirical strategies to identify behavioral responses: (1) A regression discontinuity design that builds on two speed level cutoffs used in the enforcement process and (2) an event study deign that exploits high-frequency data to compare driving before and after receiving a ticket. Both analyses provide coherent evidence, documenting a strong and persistent response to variation in punishment at the extensive margin (i.e., receiving vs not-receiving a speeding ticket. Drivers reduce their speed immediately after receiving a ticket. In contrast to this strong and persistent effect, we find no evidence that intensive margin variation in punishment related to a more than two-fold increase in fines amplifies the impact of speeding tickets.