![econlifelogotrademarkedwebsitelogo[1]](/wp-content/uploads/2024/05/econlifelogotrademarkedwebsitelogo1.png#100878)
Our Weekly Economic News Roundup: From Nike Sneakers to New Zealand Honey
November 9, 2019
The Meal That Florida Wants Us To Eat
November 11, 2019
If you decide to exceed the speed limit, it’s wise to choose where you do it.
Finland is very different from Estonia.
The Cost of a Speeding Ticket
Globally each year, there are approximately 400,000 fatalities from speeding. For younger people, the auto is a leading cause of death.
So how to minimize?
Finland believes money could be the answer. If you are stopped for speeding in Finland, your fine will be based on your daily disposable income. All they do is divide your daily salary by two. Called a day fine, that number then is multiplied by how much you exceeded the speed limit. The amount can be pretty big. In 2015, one corporate executive had to pay a 54,000 euro fine ($62,000) for topping the speed limit by 22km/h. Switzerland though holds the world’s record with a fine just over $1 million for someone driving 290km/h.
My preference however is Estonia’s solution. For now, (currently an experiment) scofflaws have to choose between standing on the side of the road for approximately an hour or paying a fine. Especially because it is more egalitarian and the punishment fits the crime, the public’s response to a time “fine” has been positive. Even if it requires more people power, I hope they retain it.
Our Bottom Line: Pigovian Punishments
We could say that fines are Pigovian solutions to a speeding problem. First explained by the British economist Arthur Pigou (1877-1989), his penalty creates a win win situation, The individual (or business) pays a fine (or a tax) and society gets the money.
Arthur Pigou:
Pigovian solutions can deal with negative externalities created by fast cars or, more typically, factories that pollute. To diminish the harm done to uninvolved third parties, Pigou created a cost. His cost was money.
BUT…
Time is also a possibility. It just means that Estonia will not only have to delay a speeder’s travels.While waiting, they also would do something productive like plant flowers or clean the road.
My sources and more: Thanks to Marginal Revolution for alerting me to the Estonia’s experimentation with speeding tickets. From there, The Economist had more of the story as did Estonia while WEF took me to Finland’s traffic ticket policy.
