The Imprisoner’s Dilemma: A Cost Benefit Approach to Incarceration

Abstract:     
Depriving an individual of life or liberty is one of the most intrusive powers that governments wield. Decisions about imprisonment capture the public imagination. The stories are told daily in newspapers and on TV, dramatized in literature and on film, and debated by scholars. The United States has created an ever-increasing amount of material for discussion as the state incarceration rate quadrupled between 1980 and 2000. While the decision to incarcerate an individual is given focused attention by a judge, prosecutor, and (occasionally) a jury, the overall incarceration rate is not.

In this article, I apply a cost-benefit approach to incarceration with the goal of informing public policy. An excessive rate of incarceration not only deprives individuals of freedom, but also costs the taxpayers large amounts of money. Too little imprisonment harms society in a different way – through costs to victims and even non-victims who must increase precautions to avoid crime. Striking the right balance of costs and benefits is what good law and public policy strive for.

Changes to the inmate population may be made in several different ways. One insight that I stress in this article is that the precise form of a proposed incarceration policy change is crucial to properly evaluating the impact of the change. Therefore, I analyze several potential policy changes and their implications for sentencing and imprisonment. The calculations are informed by recent empirical work on the various ways in which imprisonment impacts overall welfare. I find that the benefits of limited one-time prisoner releases, as well as the reclassification of some crimes exceed the costs.

Number of Pages in PDF File: 58

Keywords: crime, incarceration, cost-benefit

JEL Classification: J24, K14, K42

working papers series