The Economics of Prisons

Over on The Book of Faces, I recently shared a memory which had Bernie Sanders making one of his silly pronouncements, in this case wanting there to be more people attending college than in prisons, paired with figures that showed that we did have more people, a lot more, in college than in prison.

So, Bernie was wrong. (What else is new?) However, someone in an attempt to defend if not the statement the idea behind it, made a claim about how much it cost to keep a prisoner in prison vs. how much college (using a lowball figure for a community college there, but let that go for purposes of argument).  Uh… So?  Those two figures, frankly, are not really relevant to each other.  They bear no more resemblance than the cost of my steak for dinner and the cost to have someone mow my lawn–both involve dollars and that’s about it.

If you’re going to measure the cost of having someone in prison, the relevant measure is not the amount spent by someone else for something else.  The relevant comparison is to the cost of not having that prisoner imprisoned.  So where do we go with that?

First off, the cost of crime is hard to determine even if we want to just look at economic costs and not emotional and moral costs (which many would argue are greater).  There’s direct cost:  money stolen, property damaged, and so forth.  But there’s more than that.  There’s the cost of security protections against criminals.  There’s lost productivity because somebody has been the victim of a crime, culminating in the complete loss of all the productivity a murder victim ever would have had they not been murdered (and more than that since the victim’s loved ones can scarcely be expected to be unaffected by the loss).  The Government Accounting Office cites figures from research ranging from $690 billion to $3.4 trillion annually.

So, how much does that work out to per criminal?  What does the average criminal in the US cost us?  That’s even harder to figure because we have to determine how many criminals there are.  From a certain perspective the number of criminals is equal to the population because the laws of the United States are so expansive and, in places, self-contradictory that no one can completely avoid breaking the law at least sometimes.  Indeed, some estimates state that the average person commits three felonies a day, without even knowing it.

Looked at from the other end, the US has about 2.3 million people in prisons nationwide.  And while most criminals aren’t in prison, the most “expensive” ones (repeat violent felons) do tend to end up in prison sooner or later.  Most crimes go unsolved but most criminals eventually get caught.  This apparent dichotomy is resolved when you remember that most criminals commit more than one crime.  According to Pew research, about 1/2 of violent crimes and 1/3 of property crimes end up being solved.  To be honest, that’s actually better than I thought when I started looking.  So there are 1-2 violent or property crimes for every solved case.  So, worst case, if every criminal sent behind bars then there are 2 others out and able to continue.  The time criminals spend behind bars–averaged over all offenses and all individual cases–is about 22 months.  Call it 2 years.  So the “turnover” in the prison population is about half the total (1.15 million) per year.  The upshot is that imprisoning criminals takes a minimum of 1/3 of the criminals who could be out and committing crimes off the street which means, they save the US from losses to crime, on the order of $345 billion to $1.7 trillion annually from losses if those criminals were still out committing crimes, or about (using the lower figure) $150,000 per year per criminal.

Admittedly, that’s just looking at aggregates and making some assumptions (which I tried to make conservative and worst case) in the lack of detailed information.  It can tell you very little about specific cases.  In some cases, in some crimes, the cost of enforcement is far higher than the cost of letting it go.  In these cases it might simply be better to legalize whatever “crime” is being enforced.  I suspect that most drug crimes (strictly drug crimes–not talking about the violence that comes from the fact that the drug trade is illegal) and most “sex work” (voluntarily engaged in–slavery is a whole other ballgame, and I suspect, exacerbated by the illegality of paid sex work) falls into that category.  But that’s not the subject of this post.

The point remains that it’s quite clear that, in aggregate, the high cost of incarcerating criminals is economically justified.  This is not to say that there aren’t better ways of handling the problem.  Perhaps there are.  But the argument that it’s too expensive to keep criminals in prison simply does not work.

And until an alternative, equally effective, method of dealing with the problem is presented, it’s too expensive not to.

8 thoughts on “The Economics of Prisons”

  1. Of course, it could be argued that it might be less expensive to execute murderers (especially when there were multiple victims) than to keep them in prison for life. 😉


    1. And I think you know me well enough to know that I am not, in principal, opposed to the death penalty. I have, however, come to the conclusion that I simply do not trust the government to handle it. Flip side, is that handling execution as punishment (as opposed to self-defense) “private enterprise” presents its own problems such as back and forth cycles of reprisal that spread the bloodshed rather than contain it.


      1. Nod.

        There are arguable reasons to be against the death penalty.

        But since Bernie was talking about “economics”, I was making a (tongue in cheek) economic reason for the death penalty.


        1. As I did about prisons with the whole article.

          The objections to the death penalty are not economic, at least not in the short term. There might be longer term economic fallout that’s difficult to predict, and well, my knowledge of economics is already fairly basic. (And, sadly, most voters don’t even have that much which is why I think economics is “The Dismal Science”–too many people will support doing exactly the wrong thing because they don’t understand even basic economics.)


  2. With respect, it’s clear you haven’t thought this out at all. You blithely comment on the ‘hidden costs of incarceration’ without researching the topic very well. Sure, you covered how much prison costs, and what the average stay is. That tells us very little about prison. What about the economic costs of the permanent class of unemployables with criminal convictions? Once you have one, you literally cannot get hired to -scrub toilets-, let alone anything more productive. And then there’s the whole plea bargain mess. The current tactic is to stack up an absurd number of charges, and then offer what -looks- like a sweetheart deal. It’s not. But it allows prosecutors to claim 95% conviction rates, and keep the courts rolling. If -ten percent- of the people charged demanded their day in court, the entire judicial system would grind to a halt. Why is that? the list goes -on-. The real costs of prisons are not where you would think, not at all.


    1. it’s clear you haven’t thought this out at all

      Um, just because I don’t go into the far larger and more sweeping problems with the justice system does not mean I haven’t thought about them. The post was about one very specific topic because “blog post” not “major treatise on the economic implications of the justice system” which, if given the attention the topic deserves, would probably be worth a PhD in both Economics and Criminal Justice all by itself.

      What about the economic costs of the permanent class of unemployables with criminal convictions? Once you have one, you literally cannot get hired to -scrub toilets-, let alone anything more productive.

      Those aren’t costs of prison. You could be granted probation, and between that and bail never spend a day behind bars, and those costs would still apply. Those are costs of being convicted, not of prison per se. This would still be an economic cost even if we had some lower cost alternative for handling the criminals.

      And then there’s the whole plea bargain mess.

      Again, that’s not a matter of the cost of prison per se. House arrest. Fines. Enslavement (permitted by the Constitution for criminal convictions). All of those and any other method of punishment for crime would carry the same costs.

      I was writing a short bit about the economic cost of keeping someone in prison vs. leaving them on the street, no more than that. It was not a treatise on the larger problems with the judicial system which I merely touched on with the reference to “Three Felonies a Day.” Perhaps someday I’ll write in more detail on those topics and how the incentives actually drive those (for instance, “conviction rate” is a selling point for any prosecutor seeking public officer which provides an incentive to do anything he or she can get away with to increase it) but that would be really too much to do in a blog post. The book linked in the article itself only discusses one aspect of that and it’s not really adequate to the magnitude of the problem.


      1. That’s a fair rebuttal. You’re right in pointing out that I’m calling your article to task for failing to address a different (but strongly related) issue.


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