By Sarah Picard, Leah Nelson, Rae Walker, Kasey Eickmeyer, and Ellie Wilson

Every year, courts across the United States impose millions of dollars in fines, fees, and restitution on people convicted of traffic violations, misdemeanors, and felonies. Collectively, monetary sanctions and other criminal justice fees are referred to as legal financial obligations or simply court debt. Ostensibly, court debt is intended to sanction offenders, recover the costs of running a court system, raise revenue, and compensate victims of crime. In most jurisdictions, however, court debt is assessed without considering an individual’s ability to pay, and much of what is owed goes uncollected. Estimates suggest that there are approximately $27.6 billion in outstanding obligations. In addition to being an unreliable source of revenue, court debt can have severe and long-standing consequences for those who owe, exposing them to increasing debt, future incarceration related to unpaid debt, and the suspension of voting rights, among other collateral consequences. In jurisdictions across the country, court debt also has a disproportionate effect on the economically disadvantaged, as well as Black and Latino individuals and communities. Many of the equity and collateral consequences described above hold true for court debt assessment and collection in Jefferson County and across Alabama, as documented in a 2018 survey with over 800 Alabama residents who owed court debt. This research attracted the attention of judges in the Tenth Circuit Court in Jefferson County (home to Birmingham) who worked with Leah Nelson, lead researcher on the 2018 survey, and MDRC to develop the Jefferson County Equitable Fines and Fees (JEFF) Project, a multidisciplinary study of the scope and consequences of court debt in the county. With funding from Arnold Ventures, the JEFF Project began in 2022. The findings in this report reflect multiple lines of inquiry, including descriptive and inferential analyses of five years of case-level court data, in-depth interviews with court practitioners, and focus group discussions with individuals who have direct experience with court debt in Jefferson County. Taken together, these analyses point to a system that is neither effective in generating revenue for the court, nor fair, given its outsized impact on Black and indigent people living in poor communities. Over the five years of the study, just under half of the individuals who owed court debt paid in full, with many seeing their debt burden grow over time. The research team also isolated some of the major factors that contribute to debt growth, which include race and economic disadvantage, in addition to factors related to how debt is collected, most notably the practice of assessing a 30 percent late fee on those who do not submit a payment within 90 days. Both court practitioners and individuals who are directly affected viewed the current system as broken, with the latter describing serious financial, emotional, and collateral consequences. Findings from the JEFF Project have already prompted the reconsideration of current practices in Jefferson County, including a pilot project to reduce debt burdens and encourage payments, and the creation of a statewide task force that will examine fines and fees across Alabama. Finally, given that Jefferson County is home to a midsized  city situated in a fiscally and socially conservative state, its social and geographic characteristics make it a useful reference for many cities and counties looking to make changes in their fines and fees systems.

By Stergios Skaperdas and Samarth Vaidya

We synthesize research on conflict as a fundamental economic phenomenon, arguing that the implications of the ”dark side of self-interest” have received insufficient attention in economics. We define conflict as interactions where parties choose costly inputs that are adversarially combined against one another — distinct from the collaborative input combinations typical in economic models. We make four key contributions: First, we demonstrate that conflict induces economically significant costs comparable to or exceeding traditional deadweight losses. Second, we explain how these costs vary across contexts based on property rights protection, state capacity, and cultural norms. Third, we show how incorporating conflict into economic models leads to substantially different predictions than traditional models — including inverse relationships between compensation and productivity; distortions in comparative advantage; prices determined by power rather than solely by preferences endowments, and technology. Fourth, attributes of modern states such as centralization in the presence of law, checks and balances, other forms of distributed power, and the bureaucratic form of organization can partly be thought of as restraining conflict and appropriation, with implications for governance and economic development. Overall, in the presence of conflict and appropriation, power considerations cannot be separated from economics and first-best models are not empirically plausible.

 CESifo Working Paper No. 12135, 2025

By Oliver Bennett MBE, Ali Shalchi

The precise scale of economic crime in the UK is unknown, but it could run to tens or hundreds of billions of pounds per year. The extent of these crimes – which include money laundering, fraud, and corruption – led the Intelligence and Security Select Committee in its July 2020 report on Russia to note that London is considered a ‘laundromat’ for corrupt money. In December 2019 the Treasury Committee found various regulatory and legislative failings in the way in which these crimes are being tackled. It urged the Government to make improvements to the supervisory system and to introduce new powers to combat economic crime. A February 2022 Treasury Committee follow-up report concluded that the Government was still not prioritizing economic crime sufficiently. In 2019 The Financial Action Task Force (the global money laundering and terrorist financing watchdog) praised the UK’s efforts on the issue, but also found failings and identified a lack of resources for investigating these crimes. The Economic Crime Plan The Government agrees about the need to tackle economic crime, which it says causes “much harm to individuals and communities and damage to legitimate business and the UK’s reputation.” It set out its overall approach to tackling the issue in its July 2019 Economic Crime Plan. The Plan covers the years 2019-2022 and draws together all the work being conducted by the public and private sector. A number of the 52 actions contained in the plan may involve future legislative reforms, including changes to: • the Proceeds of Crime Act to improve how the proceeds of crime can be confiscated; • corporate criminal liability, to punish and prevent economic crimes when committed on behalf of or in the name of companies; • block company stock exchange listings on national security grounds; • improve transparency over UK property ownership; • Companies House powers to enable it strike off from its register dissolved or inactive limited partnerships. Progress with the Plan In February 2022, the Royal United Services Institute said that 40% of actions in the Plan had been completed, 17% were in progress, 23% were overdue, and 19% of actions had no due date. The Government says it is “on course to deliver 49 of the 52 actions” in the Plan. The Treasury Committee has recommended that the Plan be adapted and renewed for a further three years.   

London: UK Parliament, House of Commons Library, 2022. 22p.

MAY CONTAIN MARKUP

Donato Masciandaro, EI6d Takats and Brigitte Unger

FROM THE INTRODUCTION: “Traditionally, monetary and financial economics has focused on legal financial transactions, while the economics of crime - following Becker - has neglected the financial aspects. Hence, black finance - finance that relates to illegal or criminal activities - has fallen between the two stools. Due to this separate development in the two sub-disciplines of economics, economic theory has not addressed financial crime sufficiently, so far. This creates a particularly disturbing gap in the literature, since lately, especially in connection with terrorist financing, the financial side of crime has become accentuated in the public and political debate.”

Edward Elgar. Cheltenham, UK • Northampton, MA, USA. 2007. 274p.