The Punishment Ladder: Estimating the Impact of Di erent Punishments on Defendant Outcomes

Most criminal justice systems use a "ladder of punishments" that starts with less severe punishments and progresses to more severe punishments according to crime severity and criminal history. Using random assignment to judges, we estimate causal impacts of three common punishments on the ladder– nes, probation, and prison–on defendants’ criminal and labor market outcomes. We nd that nes increase recidivism. However, this increase is concentrated among those committing less severe crimes. Probation decreases recidivism for those committing less severe crimes and rst o enders. Neither nes nor probation a ect earnings. Prison has a mixed impact, decreasing future charges but also decreasing earnings. ∗We thank Jennifer Doleac, Naci Mocan, Magne Mogstad, Jack Mountjoy, Mike Mueller-Smith, Rosanna Smart, Chelsea Temple, and Je Weaver for their insights and the participants at the All California Labor Conference, American University, APPAM Denver, ASSA meetings, Conference on the Economics of Crime and Justice at the University of Chicago, ESPE, Helsinki GSE, IRP Conference at the University of WisconsinMadison, LSE, Nordic Summer Institute in Labour Economics, Princeton, Statistics Norway, the Texas Economics of Crime Workshop, UC Irvine, and WEAI for their comments. This paper was supported by an Academy of Finland Grant. †VATT Institute for Economic Research, Aalto University and IZA, kristiina.huttunen@aalto. ‡University of Helsinki, martti.kaila@helsinki. §Corresponding author: University of Southern California, enix@usc.edu Every country must decide how to punish those who break the law. In their response to criminal activity, most criminal justice systems use a "ladder of punishments", which starts with less severe punishments (e.g., nes), and gradually progresses to more severe punishments (e.g. probation or incarceration) for defendants who commit more crimes or more severe crimes (Lappi-Seppälä, 2016; Hinkkanen and Lappi-Seppälä, 2011). Knowing the e ects on defendants of di erent types of punishments is vital in order to determine how to implement such a ladder of punishments to reduce recidivism and promote rehabilitation. While several papers have examined the e ectiveness of the highest rung on the ladder1, prison sentences (e.g., Kling, 2006; Green and Winik, 2010; Aizer and Doyle, 2015; Eren and Mocan, 2017; Bhuller et al., 2020), we know relatively little about the e ectiveness of less severe punishments. Understanding their impact is particularly important given that prison is the punishment of last resort in most countries and makes up a minority of punishments in almost all European countries. In this paper, we estimate the impacts of the ladder’s three most common types of punishments– nes, probation, and incarceration–on defendants’ future criminal and labor market outcomes.2 This is challenging for three reasons. First, rich data on criminal defendants and their outcomes is required. Second, observed and unobserved characteristics of defendants may be correlated with both the punishment type and the defendants’ outcomes. Without a source of exogenous variation in assigned punishment, estimates may be biased. Third, all three punishments must be used frequently enough to estimate causal impacts. We overcome these challenges and present the rst evidence on the impact of all three punishments in one context. We collected data on every criminal court case and associated 1Of course, in a few countries there is yet a more severe punishment, the death penalty. We omit this punishment in this paper both because it is not applicable in our setting and because it is not applicable in many other countries. 2We do not provide a theoretical model in the paper, but such a model can be found in Doleac (2019). She presents a model of how punishments might a ect future criminal behavior, focusing on those who have already committed at least one crime.