Once More, With Feeling

I apologize in advance for beating a dead horse, but I would like to respond to a number of criticisms regarding my "benefits of wrongful conviction" argument.

To recap, here are some important links, in chronological order: my original post, responses by Greg Goelzhauser and Will Baude, my followup post, and Jonathan Wilde's critique, not to mention all of the excellent comments in the various threads.

Just to reiterate, here is my essential argument, one more time:

  1. If an innocent man is wrongfully convicted, he should be fully compensated for any damages he incurred as a result of his wrongful conviction. This is true regardless of the type of justice system, whether public or private.
  2. The appropriate amount of compensation is such that the wrongfully convicted should be indifferent between remaining free or being sent to jail with compensation.

  3. There is an appropriate amount of compensation such that any number above this amount is too high and any number below this amount is too low. While we may have no perfect method for determining the exact number, we should be able to tell in some way whether an amount of compensation is way off in either direction. For example, in most cases, $1 is way too low for one year of wrongful imprisonment, and $10 million is way too high for one day of wrongful imprisonment. The detrimental effects of undercompensation are quite
    obvious: many of us think it is unjust to damage someone without making them whole again. It is also inefficient: if prosecutors suffer negative consequences when they wrongfully convict someone, undercompensation would not provide a strong enough deterrent to prevent the prosecutors from wrongfully convicting an efficient number of people.
  4. The negative effects of overcompensation are less obvious: it might encourage people to frame themselves, and then later prove that they were wrongfully convicted in order to reap the excess compensation. The effects on the prosecutors, assuming they in some way internalize the cost of wrongful conviction, would be an inefficient amount of caution: they would let too many guilty people go because they are too worried about convicting the innocent.

  5. The only way to determine the appropriate amount of compensation is to
    somehow estimate the value of all of the costs and all of the benefits associated with the damage. Some costs might be: lost salary/wages, embarrassment, lost time spent with friends and family, mental anguish, and of course, most importantly, lost freedom. These may be difficult to calculate, but in theory, we can come up with a rough approximation of appropriate compensation. We may also wish to give punitive damages, separate from any costs or benefits affecting compensation.

Following from #4, we also need to include the benefits of wrongful conviction in our calculation, and one of the benefits is free room and board. This assumes that the prisoner would have paid for free room and board had he not been put in jail (i.e. if he was receiving free room and board from someone else, this would not be a benefit for him).

Therefore, we should deduct the benefit of free room and board from the all of the other costs, in order to calculate the appropriate compensation.

For example, let's say the total costs to me of one year in prison is $1 million. This is the amount that you would have to pay me to agree to subject myself to one year in prison. However, if this amount does not include the amount I saved from not having to pay for rent or food for a year, then it is too high. I would thus prefer one year in prison to one year of freedom. And our goal was to make a person indifferent between the two (ignoring any punitive damages).

What are some of the important criticisms of my argument?

  1. The practical considerations argument: The British government doesn't do a very good job of calculating the costs of wrongful conviction, so it is inappropriate to worry about the benefits. This may be true, but it doesn't speak to my essential point: in principle, there is nothing wrong with charging the wrongfully convicted for room and board, so long as all other costs are accounted for. I have no interest in defending this particular decision to charge for room and board if it is true that the other costs of imprisonment are not being compensated. Rather, I only wish to defend the principle that there is nothing objectionable to calculating both the costs and the benefits of imprisonment.
  2. The positive externalities argument: Wrongful conviction can be considered an externality of the justice system. The purpose of the justice system is to convict the guilty, but a harmful side effect--which cannot be avoided--is convicting of the innocent. One purpose of compensating the wrongfully convicted is to get the justice system to internalize this externality, thus reducing the number of wrongfully convicted to an efficient level while at the same time making the victims of wrongful conviction whole again.

    If the costs of wrongful conviction, such as lost freedom, are a negative externality, then the benefits of wrongful conviction, such as free room and board, are a positive externality. Thus, the positive externality argument asks: Why should we force wrongfully convicted prisoners to pay for positive externalities when we don't force people to pay for positive externalities in other situations?

    Specifically, here are two examples of the argument. Fellow Catallarchist Don Lloyd asks: "By your reasoning, if a farmer comes along and dumps a load of manure in your front yard, you would be willing to pay the bill for fertilizer that he sends in response to your complaint." Fellow Catallarchist Jonathan Wilde asks: "You are stopped at a red light. Someone walks up to your car and quickly washes your windshield. He demands payment because you benefited from his labor."

    Before I address the question of why positive externalities should be compensated in the case of wrongful imprisonment but not in these other cases, let me mention one more related question...

  3. The case of the murderous doctor. Fellow Catallarchist Brian Doss asks a very interesting question: What if someone shoots you and then gives you first aid? How much does the shooter owe in damages? Can he charge you for giving you first aid?

In fact, this is almost exactly same case as the case of the wrongfully convicted prisoner! And just as the wrongfully convicted prisoner should be forced to pay for the benefit of free room and board, so too, the victim of the murderous doctor should be forced to pay for the benefit of free medical services.

David Friedman addresses this issue in Law's Order: What Economics Has to Do with Law and Why It Matters:

A physician comes upon an auto accident, stops, and treats an unconscious and badly bleeding victim. A week later, the victim receives a bill for services rendered. Must he pay it?

Under current United States law the answer is yes. To see why, consider again the analysis of the choice between property rules and liability rules. [Micha's note: If you do not know the difference between property rules and liability rules, read the section towards the bottom of this page titled "Property or Liability Rules"] Under almost all other circumstances, the purchase of services is handled by a property rule: If I expect to provide you with services and be paid for doing so, I must first get your assent. I am not free to provide the services unasked and then bill you.

Why shouldn't billing for unasked benefits be treated as the flip side of suing for unasked injuries, a Pigouvian subsidy to compensate for a positive externality? The answer is that a property rule usually moves services to their highest valued use more cheaply and reliably than a liability rule. If the service is worth its price to me, you should be able to persuade me to buy it. That approach provides a cheaper and more reliable measure of the value of the services to me than providing services unasked and then suing for payment.

The accident victim, however, cannot contract for the service, because he is unconscious, even though the service is sufficiently valuable to make it almost certain that it is worth its cost to him. So in this case, unlike almost all others, courts enforce a negative liability rule, a Pigouvian bounty for the conferring of an unasked benefit.

Similarly, the wrongfully convicted prisoner cannot contract for room and board while he is in jail. However, just as we can reasonably assume, barring evidence to the contrary, that the unconscious accident victim would willingly agree to pay for medical care, so too we can reasonably assume, barring evidence to the contrary, that the wrongfully convicted prisoner intended to eat and protect himself from the elements had he not been imprisoned. Unless these two victims were planning on committing suicide (in which case, we don't need to take their future values into consideration anyway), we can safely assume that they wanted to continue living and would be willing to pay for it.

Brian's case is slightly different from the one David Friedman described, but the same rules apply. In David Friedman's example, the person who caused the auto accident would have to pay for all of the damages, including the medical bills. But in Brian's case, since the person who caused the damages is also the doctor who treated the victim, a portion of the damages goes right back to him! Or, in other words, since he already alleviated some of the damages he caused, he has reduced the amount he must pay in damages.

Perhaps this will seem less counter-intuitive if we completely separate the two actions. On Tuesday, Smith, a doctor, notices an injured motorist on his way to work. He delivers first aid to this motorist, who would have died otherwise, and subsequently sends a bill for services rendered (including supplies, labor, etc).

The next day, Wednesday, Smith decides to shoot this motorist. Smith is caught, tried, and convicted, and forced to pay the motorist for damages.

Are there any important differences between the case Brian described and the case I described? I don?t see any.

These two cases are unique, and for the same reason: both involve billing someone for unasked benefits precisely because the nature of the situation precludes a voluntary transaction. In the case of the auto accident, we cannot ask the victim if he wants to pay for medical services because he is unconscious. In the case of the wrongfully convicted prisoner, we cannot ask the prisoner if he wants to pay for room and board because at the time, we assumed he was guilty, and even if he had been free, he would have had to pay for room and board anyway. We can only look back retroactively and make that decision for him. We cannot ask whether he would have chosen to pay for room and board because we would expect him to give us a biased answer.

Is this paternalism? In a sense, it is. But there are no reasonable alternatives other than paternalism in these two cases. Jonathan claims that "The only reasonable standard of what benefits someone is his own consent and freely made choice." But by the very nature of these two cases, there can be no consent or freely made choices. We have to decide what to do in the absence of consent.

To paraphrase Ayn Rand, human life is the ultimate value, at least in most cases. It is difficult to imagine what values these people could have (other than suicidal desires) that would conflict with their willingness to pay to continue living.

Share this

Micha, The prisoner cannot

Micha,

The prisoner cannot be made whole, and the entire system of calculation is a sham.

If the calculation were to show a billion dollars would be required, would it be paid for several wrongly convicted prisoners. I think not.

The amount of compensation is determined in fact not on the basis of the past, but on the basis of the future. The compensation is too little if the prisoner is not satisfied and can cause extra lawsuit costs and bad publicity for the government, its office-holders and bureaucrats. It is too much if it cannot be afforded without risking the ire of the voters and taxpayers. If no amount that satisfies both conditions exists, the process is merely bureaucratically delayed until the prisoner and his heirs surrender. In any case, any detailed calculations are merely window-dressing for public consumption.

Regards, Don

Don, Why do you assume that

Don,

Why do you assume that this has anything to do with the government? The same arguments would apply to a system of private law enforcement.

The calculation would not show a billion dollars would be required, at least for most people, because the value of a statistical life is much less than that.

You do raise an interesting question about what values courts would use for someone like Bill Gates or...Martha Stewert. Should courts be more careful when convicting an incredibly wealthy person than an incredibly poor person because the potential damage is much greater? Or should courts ignore the actual lost wages of the wrongly convicted and instead use some average value? These are difficult questions to which I do not know the best answer.

You say the prisoner cannot be made whole. In a sense, this may be true. Money cannot always compensate for lost freedom. But does that mean we shouldn't even bother with compensation at all? Is that what you propose?

Micha, No, what I'm saying

Micha,

No, what I'm saying is that it is the amount of compensation that comes first and then the calculation is doctored until it becomes compatible with what is going to be paid anyway. The government calculation are going to end at 1/10th the level of the calculations of the prisoner's lawyers.

For either the government or a private company, the amount to be paid must satisfy forward-looking conditions. Everything in the past is a sunk cost, water under the bridge.

For a government the future considerations are political, for a private company the future conditions deal with future business and relations with customers.

Regards, Don

Don, While political

Don,

While political considerations often affect CBA's, my interest here is what a proper CBA would include if we were concerned only with accurately estimating the costs of wrongful conviction.

Suppose the CBA was conducted by an independent third-party, concerned only with an accurate estimation and nothing else. We could then ignore the bias you mentioned.

Micha, "...Suppose the CBA

Micha,

"...Suppose the CBA was conducted by an independent third-party, concerned only with an accurate estimation and nothing else. We could then ignore the bias you mentioned."

Not necessarily. You can run through as many third parties as you need to until you get the answer you need. The point is that the compensation is inherently constrained from the beginning, independent of the result of the calculations.

It's not so much that ALL of the factors can't be taken into account, but that I find it offensive that a single item is singled out for special treatment to the advantage of one side.

The flavor of this is something like the following :

The GAO has just audited Boeing for a $1B contract, and has found no significant problems, but the Air Force goes back and charges Boeing $0.74 because it used two government postage-free envelopes without re-imbursing postage.

Regards, Don

Don, CBA's are conducted

Don,

CBA's are conducted everyday, for both public and private customers, and those who conduct them seem to be independent enough that their calculations are useful enough to pay for.

I don't see why its offensive to include the benefits as well as the costs, so long as the costs are properly accounted for. It's not singling an item out for special treatment; we just happen to be focusing on this one item because it's controversial.

Micha, What about the other

Micha,

What about the other cases that I mentioned? Say a Tibetan monk who lives an ascetic life in a monastery without plumbing, heating, or other "modern conveniences" is wrongly imprisoned in a prison which has those "modern conveniences"? What would be the "benefits" charged to him?

CBA?s are conducted

CBA?s are conducted everyday, for both public and private customers, and those who conduct them seem to be independent enough that their calculations are useful enough to pay for.

That does not say much, by itself, about the validity of those judgments. People also pay for psychics, astrologers, faith healers, and massive vitamin doses.

I continue to enjoy reading

I continue to enjoy reading your posts, its nice to see the occasional person who understands the economic analysis of law. I think you have correctly identified the aspect of this situation which requires us to deviate from the standard "consent in advance" system, as well as what a good alternative is.

One point is that while we definitely want to calculate a good value for the cost we've imposed on the wrongfully accused, there is another set of costs which complicates matters. And that is the cost of determining if someone was wrongfully accused, along with the probability of it happening. This is analagous in more conventional law with not only using the damage done by a crime, but the cost and likelihood of detecting it.

If you simply make victims whole, then you have not provided the correct incentive for the prosecutor if wrongful prosecution is not always detected. He can still gain from convicting the innocent.

Jonathan, Say a Tibetan monk

Jonathan,

Say a Tibetan monk who lives an ascetic life in a monastery without plumbing, heating, or other ?modern conveniences? is wrongly imprisoned in a prison which has those ?modern conveniences?? What would be the ?benefits? charged to him?

No. I wrote, "This assumes that the prisoner would have paid for free room and board had he not been put in jail (i.e. if he was receiving free room and board from someone else, this would not be a benefit for him)."

That does not say much, by itself, about the validity of those judgments. People also pay for psychics, astrologers, faith healers, and massive vitamin doses.

Are you really willing to argue that nearly every large business is acting consistently irrational by paying someone to do these projections for them? We might expect a few businesses to waste their money on something useless, but they would be weeded out by the more efficient businesses.

Micha - No. I wrote, ?This

Micha -

No. I wrote, ?This assumes that the prisoner would have paid for free room and board had he not been put in jail (i.e. if he was receiving free room and board from someone else, this would not be a benefit for him).?

What about the "extra" benefit he received from better living standards - indoor plumbing, central heating, etc - particular to the prison that are not found in his monastery? Should these benefits not be subtracted from his compensation?

Are you really willing to argue that nearly every large business is acting consistently irrational by paying someone to do these projections for them? We might expect a few businesses to waste their money on something useless, but they would be weeded out by the more efficient businesses.

Not at all. I was merely pointing out that just because "everyone does it" does not make something valid economically, and this includes businesses. See late 90's tech boom.

I think every individual does a CBA with every choice he makes, and so do businesses and governments. In this case, the government decision makers performed a CBA that involved minimizing the costs accrued by compensation to the victim and political reaction and maximizing the benefits they could safely justify through withholding as much compensation to the victim as was politcally feasible.

I haven't read all the

I haven't read all the comments, but Micha's basic points appear to be correct. There is, however, an important point that nobody seems to have mentioned.

Compensation for false conviction creates an incentive for the enforcement apparatus on two different margins. It is, as you point out, is an incentive to avoid convicting people who are innocent. But it is also an incentive to avoid finding innocent people you have convicted.

In a private legal system this may not be too much of a problem, since there may be competing firms in a position to bring out the fact of innocence and take legal action accordingly. But in a government system, the people in charge of deciding whether someone who was convicted is innocent are part of the same apparatus that will have to pay damages if they do, which is a strong incentive to continue to believe that he is, or at least might be, guilty.

One other point that came up was the problem of adequately compensating someone for false conviction. I think you will find a discussion of an analogous problem--in what sense one can compensate someone for loss of life or of vision--discussed at some length in Chapter 9 of _Law's Order_.

Jonathan, What about the

Jonathan,

What about the ?extra? benefit he received from better living standards - indoor plumbing, central heating, etc - particular to the prison that are not found in his monastery? Should these benefits not be subtracted from his compensation?

No, because these benefits are not benefits to him. We cannot assume he would have purchased these extra amenities had he been free.

In 1994, a drunk driver

In 1994, a drunk driver destroyed my Harley-Davidson Sportster while I was riding it.

Pop quiz: who here can state the value of what I lost?

Until there is an answer to that question, in all its dimensions, this entire discussion is utterly ridiculous.

You people amuse yourselves, and that's cute, but your impertinence is utterly astounding.

Billy, Granted, the market

Billy,

Granted, the market value of a collector's item will not necessarily match the dollar value an specific owner places on it. But what else would you suggest? That courts simply take the owner's word for it? Ok, because my son made it and it has sentimental value to me, I value the clay ashtray you broke at $20 bazillion dollars. Is that how much the courts should fine you for breaking it?

Are we agreed that "the

Are we agreed that "the judge" should not even -- indeed cannot -- be authorized to do that?

This question goes to the matter of ethical competence that I'm pointing out here.

If we are agreed, on that, then what's the point of discussing it as if he is?

To my mind, it's a lot better to point out that this is at least one good reason why the legal system "as it is today" is no good at all, and have done with it, because that's all the point that needs to be made about it. It is idle -- at best -- to sit around talking about a fundamentally defective thing "doing its best".

Look, Micha: I know that,

Look, Micha: I know that, sometimes, facts are inconvenient things.

If you really want a suggestion, then I suggest attending the fact that only the person who's been wronged can state the value lost.

That's what it is: a fact.

It is also the crucial fact at the root of the wrong of your position on that false imprisonment deal.

Billy, I don't think Micha's

Billy,

I don't think Micha's position is that a judge can definitively state the value of what you lost. I thought Micha was saying that before too, but I realized that is not what he is saying.

He is just saying that the judge should try his best to estimate the value of what you lost, given the type of legal system that is in place today.

This has nothing at all to

This has nothing at all to do with how the legal system is today; the same problem would occur under any conceivable legal system. When determining compensation for damages, a judge cannot simply take the victim's word for how much he thinks he should be compensated, for obvious reasons.

If you don't think a (relatively) impartial third-party should be authorized to determine appropriate compensation, what alternative do you have in mind?

If you must know, I propose

If you must know, I propose that people behave themselves, and that they pay whatever it costs when they don't.

It's really pretty simple.

And, no matter what alternative anyone has in mind, it is no solution to disqualify a victim from judging his loss just because he's the victim.

There is nothing right about that.

I agree with your proposal:

I agree with your proposal: people should behave themselves. And I also agree that they should pay the costs when they don't.

But how much? What do you mean by "whatever it costs"? "Whatever" is not a quantifiable fine, nor is it a specific performance. How should costs be determined?

If you dent my fender and I believe that the punishment for denting my fender should be death, is that reasonable? Am I morally justified in taking your life for denting my fender?