The problem with fines is that they can turn into fees

January 24, 2014 by
Filed under: Social Brain 

If you are late, you have to pay a price. Normally it’s the social price of mild shame, but what happens when you are asked to pay an economic price instead?

The front page of yesterday’s Metro announced a £60 fine imposed on parents if their children are late for school.  At first blush this might seem like an obvious solution to a simple problem: to deter an unwanted behaviour, make it less attractive by imposing a monetary fine on it. But research from behavioural science shows that this model of change does not always pan out in real life.

The question is whether and how this £60 fine will affect parents’ actions; to this end research by Uri Gneezy and Aldo Rustichini detailed in their paper “A Fine is a Price” offers a potential answer. The researchers tested the effect of imposing a fine on parents for late collection of their children from a child care centre, and found, perhaps surprisingly, that late pick-ups increased under the fine.

The researchers tested the effect of imposing a fine on parents for late collection of their children from a child care centre, and found, perhaps surprisingly, that late pick-ups increased under the fine.

Whereas prior to the implementation of the fine policy parents would typically feel guilty about coming late, the monetary penalty served as a way to “pay” for their tardiness, thus absolving them of their guilt. It seems that for many people simply paying a fee is preferable to the emotional penalty of feeling ashamed or guilty. The take home message from Gneezy and Rustichini’s research is that introducing a monetary penalty can change a context from being a social transaction to a market transaction, and once this change occurs, it is very hard to revert back to the original relationship which is guided by social norms.

According to the Metro article, at least someone is aware of this risk. “Chris McGovern, of the Campaign for Real Education, warned: ‘They could undermine relations between school and parents – the cornerstone of any school’s success.’

It is possible, if not likely, that the £60 fine policy being imposed by three schools in Milton Keynes would fall prey to the same surprising results as the child care centre experiment, where the intrinsic motivation to be on time is crowded out by extrinsic drivers.  But the £60 policy may have other surprising consequences too, due to the conditions of the fine.  According to the article by Le Marie, the fine is imposed on parents for each child who is late 10 or more times in a 12-week term, payable within 21 days.  If the fine goes unpaid it doubles to £120 payable within 28 days.

Firstly, the policy changes the norm. Since a child needs to be late 10 times to get the fine, those parents or carers who are frequently late – say 6 or 7 times in a 12-week term – might change their point of reference.  Perhaps they will no longer compare themselves to the ideal (always on time) but instead to the most salient marker (which now is being late 10 times), so rather than feeling relatively bad about their tardiness they may start to feel “better than average” or at least “better than the worst”.

Secondly, one could question the efficacy of such steep non-payment (or late-payment) penalties.  A 100% penalty would be considered heavy, even compared to the oft-vilified payday loans (on average charging a £12-£25 late fee on a £100 loan).  Behavioural economist Sendhil Mullainathan and Psychologist Eldar Shafir explain in their book Scarcity that humans’ cognitive resources are limited, and when we are struggling to deal with not having enough of something such as time or money, our decision-making ability is impaired.

In effect, we become so busy trying to juggle certain pressures that we don’t have the mental energy left to deal with other challenges, such as, for example, bringing our child to school on time. One way to mitigate this sub-optimal decision making in the peripheral domains is to relieve some of the pressure on the major problem (e.g. lack of time or money) – exactly the opposite of slapping an expensive fine onto a parent, potentially further exacerbating the underlying issue.

This point was echoed by Netmums founder Siobhan Freegard’s statement that “‘Children who are frequently late to school are often from chaotic family backgrounds. Taking money away from struggling parents could just make a bad situation worse.’

Last November an article in The Guardian noted that parents wishing to take their children out from school for holiday during term time would be faced with a similar fine.  The initial results of this policy show that applications for taking children out of school have in fact increased since its introduction.

It is yet to be known whether Milton Keynes’s borough-wide £60 fine policy will change rates of tardiness.  But both the behavioural science research and the failure of the term-time holiday penalty suggest that the policy will not work.  These effects, surprising to many, illustrate why it is so important to question our underlying assumptions about human nature, and to trial interventions on a small scale before rolling out a large scale policy change.

 

Nathalie Spencer is a behavioural economist at The RSA’s Social Brain Centre. Reach her at Nathalie.spencer@rsa.org.uk

Article on term-time holiday penalty h/t Chris Gaskell.

Comments

  • Benjamin D

    Interesting Behavioural insights Nathalie. Also makes me think that it is an indicator of school as an ‘exam factory’ a place of work almost, rather than an engaging environment of learning – like amazon workers who get the sack after being late 3 times at the warehouse. I’d be interested to see the behavioural impact on the children themselves – turning school attendance into a market transaction will surely have an impact on their own view of education.

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  • Nathalie

    Thanks, Benjamin. That’s an interesting thought about the impact on the child’s experience. If you come across any research on that please do send it my way! :o)

  • Warren Hatter

    `Nathalie, I think you’ve neatly demonstrated here one point I was struggling to make at last night’s #LSEnudge event (my brief blog is here: wp.me/p2jpRC-4t), that as our understanding of our biases improves with the growing body of evidence, we can design services more effectively. The debate doesn’t have to be framed as a contest between fiscal measures vs legal measures vs “nudges”. The more we treat behavioural insights as everyday, simply part of understanding what we’re like, the fewer backfiring decisions we’ll get like the one in Milton Keynes.

    • Nathalie

      Hi Warren, Great to see you on Monday and thanks for sharing your blog post. Totally agree – it doesnt have to be an either/or situation, instead we should be using the insights on human behaviour in the development of (or to improve existing) interventions to improve their effectiveness.