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We use traffic data from a series of experiments in the United States and Israel to examine how illegal behavior is deterred by various penalty schemes and whether deterrence varies with age, income, driving record and criminal record. We find that red light running decreases sharply in response to an increase in the fine or an increase in the probability of being caught. The elasticity of violations with respect to the fine is larger for younger drivers and drivers with older cars. Drivers convicted of violent offenses or property offenses run more red lights on average but have the same elasticity as drivers without a criminal record. Within Israel, members of ethnic minority groups have the smallest elasticity with respect to a fine increase.

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This paper presents an extension of the life-cycle permanent-income model of consumption to the case of a durable good whose purchase involves lumpy trans- actions costs. Where individual behavior is concerned, the implications of the model are different in some respects from those of standard consumption theory. Specifically, rather than choose an optimal path for the service flow from durables, the optimizing consumer will choose an optimal range and try to keep his service flow inside that range. The dynamics implied by this behavior is different from that of the stock adjustment model. Properties of aggregate durables consumption are derived by explicit aggregation. In particular, it is shown that expenditures on durables display very large short-run elasticity to changes in permanent income. Empirical tests of the sort suggested by Hall (1978) generally produce results that are in line with the predictions of the theory.

Consumption (Economics) --- Econometric models.