Re: The economics of incarceration

[Peter Hollings <phollings@xxxxxxx>]

Interesting. Subjectively, I would agree with the conclusion that we are
incarcerating too many. For example, if the costs of incarceration are
$46,000/year, we ought to be able to rehabilitate many criminals for
less than that. But how can one derive an optimal level of incarceration
without considering the costs of crime as well as other solutions such
as rehabilitation?

Peter Hollings

-----Original Message-----
From: PEN-L list [mailto:PEN-L@xxxxxxxxxxxxxxxx] On Behalf Of michael
perelman
Sent: Monday, February 28, 2005 8:42 PM
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Subject: [PEN-L] The economics of incarceration


Donohue, John J. 2005. "Fighting Crime: An Economist's View." The Milken
Institute Review, 7: 1 (First Quarter): pp. 46-58.

 48: "Between 1933 and 1973, incarceration in the United States varied
within a narrow band of roughly 100 to 120 prisoners per 100,000
population.  Since then, this rate has been increasing by an average of
5 percent annually.  As of June 2003, some two million individuals were
imprisoned -- a rate of almost 500 per 100,000."

 48: "On the benefit side, the research suggests that the "elasticity"
of crime with respect to incarceration is somewhere between 0.1 and 0.4
-- that is, increasing the prison population by 10 percent reduces crime
by 1 to 4 percent.  On the other side of the equation, estimates of the
cost of locking up another individual run between $32,000 and $57,000
annually."

 48: "The most rigorous study on the relevant elasticity was conducted
by William Spelman of the University of Texas.  He concluded that "we
can be 90 percent confident that the true value is between 0.12 and
0.20, with a best single guess of 0.16."  Since Spelman's estimates
accounted for the incapacitation effect, but ignore any deterrence
effect, I rely conservatively on somewhat larger elasticity of 0.2."

 48: "With an elasticity of crime with respect to incarceration of 0.2
and an annual cost of housing a prisoner of $46,000, the "optimal" level
of incarceration would require imprisoning 300,000 fewer individuals.
This is just a ballpark estimate, of course.  But, at the very least, it
implies that we cannot expect to get much more crime reduction at
reasonable cost by increasing the numbers behind bars."

--

Michael Perelman
Economics Department
California State University
michael at ecst.csuchico.edu
Chico, CA 95929
530-898-5321
fax 530-898-5901