Prison Crime and the Economics of Incarceration

Abstract

As the United States’s prison and jail populations have skyrocketed, a wealth of empirical scholarship has emerged on the benefits and costs of incarceration. The benefits, from an empirical perspective, consist of the amount of crime prevented by locking people up, as well as the value of that prevented crime to society. The costs consist of direct state expenditures, lost inmate productivity, and a host of other collateral harms. Once these benefits and costs are quantified, empirical scholars can assess whether it “pays,” from an economic perspective, to incarcerate more or fewer criminals than we currently do.

Drawing on this academic literature, policymakers at all levels of government have begun using cost-benefit analysis to address a wide range of criminal justice issues. In addition to evaluating broader proposals to increase or decrease incarceration rates, policymakers are assessing the costs and benefits of myriad narrower reforms that implicate the economics of incarceration. In each of these areas, policymakers rely heavily on empirical scholars’ work, whether by adopting their general methods or incorporating their specific results.

While these economic analyses of incarceration offer important insights, they suffer from a near-universal flaw: They fail to account for crime that occurs within prisons and jails. Instead, when scholars and policymakers measure the benefits of incarceration, they look only to crime prevented “in society.” Similarly, when they measure the costs, they ignore the pains of victimization suffered by inmates and prison staff. This exclusion is significant, as prison crime is rampant, both in relative and absolute terms.

To address this oversight, this Article makes several contributions. First, it provides a comprehensive review of the literature on the benefits and costs of incarceration, and it explores a range of ways in which policymakers are applying this economic framework. Second, it makes a sustained normative argument for the inclusion of prison crime in our economic calculus. Third, it draws on the scarce available data to estimate the impact that the inclusion of prison crime has on our cost-benefit analyses. As might be expected, once prison crime is accounted for, the economics of incarceration become significantly less favorable.

Keywords: Economics, criminology, cost-benefit analysis, criminal justice reform, mass incarceration