Warning, Learning and Specific Deterrence: Evidence from Italian Drivers’ Demerit Points

Abstract: Deterrence depends on several factors such as the perceived probability of detection and conviction, the penalties on repeated offences, the combination of monetary and non-monetary sanctions, people’s reaction to warnings and learning. While the literature has separately considered each single issue, a comprehensive analysis is still missing. In this paper we analyze the effects of a complex deterrence system which embeds all the above features: the point - record driving license. We exploit a random sample of 50,000 drivers observed during the period July 1, 2003 - May 20, 2009, in Italy. Our results show that the point – record driving license had a positive but vanishing deterrent effect over time on recidivists. We also show that this reduction in deterrence has been stronger for those drivers who benefited from redemptive mechanisms (i.e. those who received the full or partial reinstatement of points, once their record has been kept clean for a given time – span). We then provide a theoretical explanation based on learning theories of deterrence to explain the failure of this sanction system in effectively deterring repeat offenders.