Abstract: In the United States, policing can be a major source of municipal revenue, creating incentives for law enforcement to maximize collections rather than public safety. We investigate this issue in the context of reforms in the state of Missouri designed to curb policing for profit after the 2014 shooting of Michael Brown. We document large aggregate declines in per-capita collections and traffic stops immediately after the shooting. This decline is concentrated among municipalities with the motive and opportunity to engage in policing for profit. Motivated by these findings, we focus on a reform that changed revenue incentives by requiring municipalities to remit to the state government any revenue from policing above a threshold. We find that municipalities treated by the reform significantly reduced both collections and stops; as a result, the reform can explain as much as half of the post-Ferguson declines in collections. We then investigate the implications of this response for traffic safety and racial disparities in policing. Overall, our findings highlight how revenue motives in law-enforcement can distort the criminal justice system and how this simple reform served to limit these distortions.

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