The Impact of Reduced Towing Fees on Vehicle Redemption Rates for Low-Income Individuals: Evidence from San Francisco's 2020 Policy

Min Min Fong, Abhishek Nagaraj

Keywords: Vehicle towing, Fines and fees, Low-income, Public finance, Policy evaluation, Difference-in-differences, Poverty tows, Municipal enforcement

TL;DR: San Francisco’s 2020 tow fee waiver significantly increased vehicle redemption among low-income owners, showing that direct financial relief can reduce asset loss from fines and fees.

Abstract: This paper examines the impact of an August 2020 San Francisco policy that drastically lowered towing fees for low-income individuals. Leveraging a comprehensive dataset of towing incidents, we employ a difference-in-differences design to estimate the causal effect of the fee reduction on vehicle redemption rates. Our analysis shows the policy was highly effective, increasing the redemption rate for a low-income proxy group, with the effect being concentrated among "poverty tows" (e.g., for unpaid tickets) and was largest for owners of the oldest vehicles, suggesting the financial relief was most impactful where it was most needed. Our results provide rigorous evidence that direct financial relief can prevent asset forfeiture and promote equity in municipal fine enforcement.

Submission Number: 168