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The post I responded to said the fine “should be significant compared to what they can afford”. This isn’t the standard economic formula (which I agree with). I

The post I responded to said the fine “should be significant compared to what they can afford”. This isn’t the standard economic formula (which I agree with). It’s a different standard that would have companies that can afford more pay larger fines.

nielsbot 7y ago
That's correct. If they can afford more, they should pay more. I think it's similar to speeding fines in Finland: proportional to your income. A wealthy person can ignore a $150 speeding ticket. Deterrence is the goal.
- TeMPOraL 7y ago
  That works for individuals and non-monetary infractions. You can't do a precise "punishment > expected profit" calculation on speeding tickets in dollars, because people don't speed for an explicit, rationally priced-in benefit. They speed for emotional reasons - overconfidence, hurry, stress, anger. Since the benefit is denominated in emotional terms, the punishment must be too - hence the idea to punish for equivalent hurt, which scales more-less linearly with income. On the other hand, a corporation rarely if ever does anything for reasons other than "revenue > costs"; in fact, it usually employs people making sure that ideas violating that rule don't get executed. So calculating a punishment in a way that erases all profits from the infraction and then some is a very good strategy when dealing with big companies.
  - ryukafalz 7y ago
    Two things though: If you’re basing the punishment on profits from the infraction, you still have to take into account the percentage of those infractions that are punished. If the fine is 5x what the company would make from that behavior, but there’s only a 5% chance they get caught, they may very well choose to do it anyway. Also, corporations are made of people. An emotional punishment may sway someone high up at the company who has the power to reform it.

nielsbot 7y ago

That's correct. If they can afford more, they should pay more. I think it's similar to speeding fines in Finland: proportional to your income. A wealthy person can ignore a $150 speeding ticket. Deterrence is the goal.

TeMPOraL 7y ago
That works for individuals and non-monetary infractions. You can't do a precise "punishment > expected profit" calculation on speeding tickets in dollars, because people don't speed for an explicit, rationally priced-in benefit. They speed for emotional reasons - overconfidence, hurry, stress, anger. Since the benefit is denominated in emotional terms, the punishment must be too - hence the idea to punish for equivalent hurt, which scales more-less linearly with income. On the other hand, a corporation rarely if ever does anything for reasons other than "revenue > costs"; in fact, it usually employs people making sure that ideas violating that rule don't get executed. So calculating a punishment in a way that erases all profits from the infraction and then some is a very good strategy when dealing with big companies.
- ryukafalz 7y ago
  Two things though: If you’re basing the punishment on profits from the infraction, you still have to take into account the percentage of those infractions that are punished. If the fine is 5x what the company would make from that behavior, but there’s only a 5% chance they get caught, they may very well choose to do it anyway. Also, corporations are made of people. An emotional punishment may sway someone high up at the company who has the power to reform it.