Crime and (with a lag) punishment: the implications of discounting for equitable sentencing.

• Author: Listokin, Yair

ABSTRACT:

Because criminals discount the future, the deterrence and retributive value of a given criminal sanction steadily decreases as the lag between crime and punishment lengthens. Discounting thus implies that the same nominal sentence will have disparate discounted values when imposed after different lags. Since lags between crime and punishment are both ubiquitous and widely-varying, pre-conviction delays constitute an important (and hitherto overlooked) source of sentencing disparities. Because the mitigation of sentencing disparities is an important aim of criminal law, this essay proposes maintaining constant discounted sentencing terms by adjusting individual sanctions to account for the lag between crime and punishment. These adjustments may be large since the lag between crime and punishment is often lengthy and criminals may discount the future rapidly. Applying similar reasoning, the essay also proposes that convicted pretrial detainees should receive "interest" in addition to credit for time served since their sentences begin earlier and have greater discounted values.

1. INTRODUCTION

   The wheels of justice turn both slowly and erratically. Punishments for crimes are often imposed after long and widely-varying lags. Since criminals, like all individuals, discount the future, (1) the lag between crime and punishment has wide-ranging implications for the goal of equitable sentencing, one of the fundamental goals of criminal law.

   Discounting implies that a punishment at some time in the future has a smaller deterrent and retributive effect than the same punishment in the present. Discounting applies most simply to criminal sanctions in the form of fines. Because of the time value of money, a fine imposed today costs more in discounted terms than the same fine imposed in one year's time. For example, if a criminal can borrow at a 10 percent interest rate, then a fine of $10 today is the same severity as a fine of (1 + .1)*$10 = $11 in one year's time. Thus, a fine of $10 in one year's time is less severe than a fine of $10 today.

   Although it is less obvious, a similar principle applies to incarceration and other types of commitments of time. (2) Indeed, the existence of a positive interest rate directly implies that discounting does not simply apply to money because money can be exchanged for goods, services, or other items of consumption. When someone borrows money (or chooses to reduce their savings) to purchase an item in the present, that person is showing a preference for consumption now rather than even more consumption in the future. For example, if the interest rate is 10 percent, then every purchase exchanging money for consumption made today yields 10 percent less overall consumption than placing the money in the bank and withdrawing it to purchase consumption next year. (3) This behavior only makes sense if individuals prefer present utility to future utility, all other things equal. If people did not prefer present consumption to future consumption, then they would save the vast proportion of their money because they could enjoy more consumption (in absolute terms) by deferring consumption and enjoying a positive rate of return on their savings. Indeed, if people did not discount future utility, then so many people would save so much money that the interest rate should be driven to zero in real terms. Because we live in a world with positive interest rates, economists conclude that people must discount the future. (4) A recent psychological study confirms that people discount future "expenditures" of time relative to current time commitments. (5)

   Just as people prefer utility today to utility tomorrow, so too they prefer to defer something unpleasant to the future rather than incurring it in the present. Indeed, many items of consumption, such as washing machines, dishwashers, and housecleaning services, reduce disutility rather than provide utility directly. The fact that anyone would purchase $10 of housecleaning services in the present rather than saving the money to purchase $11 of housekeeping in the future implies that individuals prefer to defer something unpleasant to the future rather than incurring it in the present.

   These arguments suggest that incarceration, a form of disutility, is subject to discounting. This notion is well accepted in the economic analysis of crime. Indeed, one introductory law and economics textbook asserts that not only do criminals discount incarceration, but that they "discount punishments [including incarceration] for ... futurity more highly than other people." (6)

   Because of discounting, two otherwise equivalent sentences imposed at differing lags after the crime will have differential severities. A criminal sentenced to five years of prison whose punishment begins soon after committing a crime receives a stiffer penalty than a criminal who committed the same crime but was sentenced to five years in prison after two year's delay. (7) Although the two criminals will spend the same ("nominal") amount of time in prison, the first criminal was incarcerated earlier. This implies that the first criminal received the sanction with the greater present discounted (or "real") disutility. (8) Throughout the essay, the term "nominal" will be used to describe the value of a sanction without accounting for discounting, while the term "real" will refer to the discounted value of a sanction at the time the crime was committed. (9)

   Many theories of criminal punishment, including the retributive theory, consider equal justice under the law one of the fundamental aims of a just legal system. (10) The Fourteenth Amendment to the United States Constitution has been interpreted to "require[] that in the administration of criminal justice no person be subjected to a greater or different punishment for an offense than that to which others of the same class are subjected." (11) If these principles apply to real rather than nominal sanctions, then the sentencing disparities that result from the interaction between lags between crime and punishment and discounting are vexing. Indeed, one of the primary goals of the Federal Sentencing Guidelines is achieving "reasonable uniformity in sentencing by narrowing the wide disparity in sentences imposed for similar criminal offenses committed by similar offenders." (12) And yet the very same sentencing guidelines include no mention of the lag between crime and punishment, allowing for disparate sentencing whenever similar criminals are punished after divergent lags.

   The legal academy has implicitly noted that lags between crime and punishment may have negative consequences. (13) As a result, the 1970s witnessed some emphasis on improving the speed of trials and sentencing, culminating in the passage of the Speedy Trial Act, which aimed to minimize the lags between crime and punishment. (14) Judge Posner has noted that this statute was motivated by two seemingly conflicting goals. (15) On the one hand, "delay in bringing a criminal defendant to trial is hard on the defendant by subjecting him to protracted uncertainty about his fate," while on the other hand the delay was "hard on society by reducing the expected cost of punishment for anyone with a positive discount rate." (16) Posner further observed that these conflicting goals result in asymmetric treatment for disparate defendants. The delays were harmful for one class of defendant--those who were placed in pretrial detention--while pretrial delays were beneficial to another class--those free on bail. (17) Posner's insightful but brief analysis, however, does not go beyond this observation.

   Other analyses of the lag between crime and punishment are similarly abbreviated. In these studies, the conclusion has generally been that the lags in the courts must be curtailed to minimize the impact of these lags on the corrections system. (18) While this is a laudable goal, it can never fully eliminate lags between crime and punishment. To date, there has been almost no discussion of how to modify the procedures of criminal justice to address the inequities created by discounting and disparate lags between crime and punishment.

   Because the mitigation of sentencing disparities is an important aim of criminal law, this essay proposes maintaining constant discounted sentencing terms by adjusting individual sanctions to account for the lag between crime and punishment. The longer the lag between crime and punishment, the stiffer the nominal sanction will be. Moreover, the size of the adjustment to both fines and prison sentences will depend upon criminals' discount rates. These adjustments are not punitive. Rather than penalizing the criminal for being punished after a long lag, time-varying sentencing serves to equalize sentencing by adjusting for the impacts of discounting. Under the proposal, there is no reason for the average sentence length to grow. Instead, criminals punished after short lags will receive smaller punishments than the status quo, while criminals punished after long lags will receive longer sentences than presently. The net effect on the average sentence should be near zero.

   For fines, the revised sanctioning scheme would be analogous to the imposition of prejudgment interest on civil awards. (19) The adjustment for prison sentences is more complex (and generally larger) because discounting occurs over the length of the prison sentence. (20) Thus, this essay progresses beyond the laudable but impossible goal of eliminating lags between crime and punishment. Instead, it proposes an answer to address this seemingly intractable problem.

   Even if the time-varying sentencing scheme proposed here is not adopted, the inequities created by the interaction of discounting with lags between crime and punishment cannot be ignored. For example, pretrial detention credit procedures cannot be properly understood without considering the impacts of discounting. Under...