Prison Crime and the Economics of Incarceration.

AuthorGifford, Ben
PositionIntroduction through II. Applying the Economic Framework, p. 71-103

Part 1 of 2

Table of Contents Introduction I. The Economics of Incarceration A. The Benefits of Incarceration 1. The crime-prevention effect 2. The costs of crime B. The Costs of Incarceration 1. Government expenditures 2. Other costs II. Applying the Economic Framework A. Population-Level Applications B. Policy-Level Applications 1. Changing the incarceration rate 2. Alternatives to incarceration 3. Intervention programs III. Accounting for Prison Crime A. A Flaw in the Economic Framework B. Who Has Standing in Our Cost-Benefit Analyses? C. Granting Standing to Victims of Prison Crime 1. Prison crime is not "part of the punishment" 2. Prison crime is not preferable IV. Rerunning the Numbers A. The Costs of Prison Crime 1. Murder 2. Rape 3. Aggravated assault B. Measuring the Impact Conclusion Appendix Introduction

The past few decades have seen an explosion in the number of Americans behind bars. (1) In 1980, there were 503,600 inmates in our nation's prisons and jails. (2) By 2015, that number had jumped to 2,172,800. (3) When individuals on parole and probation are taken into account, the adult correctional population in the United States is nearly 7,000,000, or 1 in 37. (4) What's more, the United States is an outlier. Although other Western democracies have seen increases in their prison populations over the same period, (5) the United States currently incarcerates "more than any other country on Earth," (6) in both overall and per capita terms. (7) Indeed, while the United States has only 5% of the world's population, it claims nearly one-quarter of the world's prisoners. (8)

Given the sheer size of our recent carceral surge, it is natural to ask whether we are now locking too many people up, and how we would know if we were. A plethora of empirical research has tried to answer these questions using traditional principles of cost-benefit analysis. According to this framework, the benefits of incarceration are measured in terms of the value of crime that is avoided by putting criminals behind bars. The costs are measured by looking to the expenses associated with constructing and operating prisons and jails, the productivity that is lost to society when individuals are incarcerated, and the collateral effects that incarceration has on inmates' families and communities. Once the benefits and costs are tallied, scholars are able to determine whether it "pays" to incarcerate more or fewer people than we currently do. (9)

Drawing on this academic literature, policymakers at all levels of government are also using cost-benefit analysis to address a wide range of criminal justice issues. (10) In addition to evaluating general proposals to increase or decrease incarceration rates, (11) policymakers are assessing myriad specific reforms that implicate the economics of incarceration. These include changes to substantive and sentencing laws, investments in alternative crime-prevention strategies, and intervention programs aimed at reducing recidivism among those already incarcerated. (12) In each of these areas, policymakers are relying heavily on the work done by empirical scholars, whether by adopting these scholars' general methods or by incorporating their specific findings.

Of course, by focusing narrowly on quantifiable costs and benefits, researchers and policymakers risk overlooking important (even crucial) considerations, such as the unfairness inherent in imposing certain sentences, (13) or the radically disproportionate impact that incarceration has on minority groups. (14) Any prescriptions drawn from these economic analyses must therefore be read with appropriate qualifications. Cost-benefit analysis nevertheless provides a powerful framework through which to evaluate the criminal justice system. After all, if everything else is held equal, we should try to make policy changes whose benefits exceed their costs.

While analyses involving the economics of incarceration yield important insights, they suffer from a near-universal flaw: They do not account for crime committed inside prisons and jails. Instead, when scholars and policymakers calculate the benefits of incarceration, they look only to the gross amount of crime avoided in society. Similarly, when they calculate the costs of incarceration, they almost always fail to consider the costs of victimization behind bars. For economic analyses of incarceration, and the laws and programs that rely on those analyses, prison crime simply doesn't count.

This exclusion is significant. (15) Although available data is scarce, the information we have suggests that crime, especially violent crime, is rampant in prisons and jails. As an illustration, the most recent National Inmate Survey, conducted by the Bureau of Justice Statistics (BJS), found that between 3% and 4% of inmates "reported experiencing one or more incidents of sexual victimization by another inmate or facility staff in the past 12 months or since admission to the facility, if less than 12 months." (16) Compare this with the national self-reported rate of rape and sexual assault over the same period, according to the BJS's National Crime Victimization Survey (NCVS): less than 0.15%. (17) While both of these figures may reflect significant undercounting, (18) they imply that the amount of sexual victimization that occurs inside prisons and jails, in absolute terms, is within an order of magnitude of the amount that occurs outside. (19) And sex crimes are only one type of victimization that occurs behind bars. By failing to account for such a substantial amount of crime, scholars and policymakers paint an unrealistically favorable picture of the economics of incarceration. They correspondingly understate the value of programs that keep people out of prisons and jails.

In order to address this oversight and more accurately assess the costs and benefits of incarceration, this Article makes several contributions. First, Part I surveys the literature on the economics of incarceration, with particular attention to studies that measure the amount of crime that incarceration prevents, the value of that prevented crime to society, and the costs of incarceration. Part II then explores a range of different policy applications involving the economic framework introduced in Part I. As Part II illustrates, policymakers at all levels of government are applying a cost-benefit framework to evaluate not only general proposals to increase or decrease the prison population, but also a host of specific laws and programs that implicate the economics of incarceration.

Next, Part III highlights the near-universal manner in which prison crime is excluded from economic analyses, and it examines the possible justifications for this exclusion. Although these justifications are rarely articulated, they appear to rely either on the view that prison crime is part of the punishment that criminals deserve, or on the related view that prison crime is preferable to crime in the outside world. Part III argues that these views are misguided, and it draws on the concept of economic "standing" to show that we are not justified in excluding prison crime from our cost-benefit analyses.

Finally, Part IV looks to the scarce data available on the prevalence of prison crime, and it estimates the impact that inclusion of this data has on economic analyses of incarceration. Even when we confine our inquiry to the costs associated with violent victimization, Part IV finds that accounting for prison crime has a significant impact on our cost-benefit analyses: Regardless of the assumptions we use, the costs of incarceration increase substantially.

  1. The Economics of Incarceration

    1. The Benefits of Incarceration

      The goal of incarceration, from an economic perspective, is to reduce crime. Specifically, empirical scholars quantify the benefits of incarceration by measuring two variables: the amount of crime prevented by locking people up and the avoided costs of prevented crime. Both steps of this calculus are complicated and controversial. With respect to the amount of crime prevented, the effects of incarceration are difficult to quantify due to the plethora of methodological approaches available (20) and the number of possible confounding variables. (21) With respect to the costs of prevented crime, quantification has repeatedly "vexed economists," (22) because many costs of crime are indirect-such as the money spent on locks and security systems-while others are direct, but intangible--such as the pain, suffering, and psychological trauma suffered by victims. Notwithstanding the empirical uncertainty in the area, this Part aims to provide a range of estimates of the benefits of incarceration by surveying the literature on the crime-prevention effect of incarceration and the avoided social costs of prevented crime.

      1. The crime-prevention effect

        Even the fiercest critic of mass incarceration must acknowledge that national crime rates have plummeted as prison populations have soared. (23) In 1980, when the number of inmates was less than a quarter of what it is today, (24) the reported violent crime rate in the United States was nearly 600 incidents per 100,000 inhabitants, according to the Federal Bureau of Investigation's Uniform Crime Reports (UCR). (25) By 2014, that number had dropped to 376. (26) Similarly, in 1980, the country's reported property crime rate was over 5,300 incidents per 100,000 people. By 2014, it was under 2,600. (27) Although there have been interruptions in this downward trajectory--crime rose in the mid-to late 1980s before starting to fall again in the early 1990s (28)--the trend has held uniformly across each subcategory of crime reported by the UCR. (29)

        Of course, correlation does not imply causation, and empirical scholars have suggested a number of alternative explanations for the crime drop the United States has experienced over the past few decades. Economic growth is one frequently cited driver...

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