Abstract
This paper examines the economic rationale of the two key rules governing retroactivity in criminal law: the prohibition of ex post facto laws, and the lex mitior principle. The former precludes the retroactive imposition or aggravation of criminal liability, while the latter mandates the retroactive application of laws decriminalizing conduct or reducing the punishment for it. The study presents a formal model analyzing how these principles impact social welfare under condi- tions of risk neutrality and risk aversion, as well as when the implementation of sanctions and the adjudication of cases entail significant social costs, and when the legislature’s utility is not aligned with social welfare. Our model shows that, if individuals are risk averse, retroactivity is not optimal. If implementing penalties entails costs, the results depend on the function of these costs. If it is strictly convex (e.g., sanctions show diseconomies of scale, which is arguably the case with the most severe penalties) or strictly concave, non-retroactivity is socially optimal. If it is linear (as in the standard Law and Economics model of law enforcement), both retroactivity and non-retroactivity can maximize social welfare. If adjudicating cases entails social costs, the retroactivity (non-retroactivity) of either ex post facto laws or lex mitior might increase, lower or have no effect on such costs, while preserving the same level of deterrence. In all but one scenario, retroactivity is suboptimal or non-necessary to maximize social welfare. If some legislatures overestimate the harm caused by potentially harmful conduct, then the constitution should forbid retroactive increases in sanctions, and either allow or mandate the retroactivity of milder laws. If establishing a milder law with retroactive effect entails a political cost for the legislature, a constitutional provision mandating the retroactivity of lex mitior would induce the legislature to impose suboptimal sanctions. Overall, the findings of this paper provide strong support for the prohibition of ex post facto laws, and weak or no support for the application of lex mitior