The Economics of Mass Incarceration

In the U.S. we have built a system of mass incarceration that has proven to be a cruel and self-defeating answer to poverty, income inequality, the lack of mental health services, and racial tensions. It took decades and massive government spending to create. Unfortunately, it is not cost-effective and is not working. In addition to being immoral and unjust, it fails a basic cost-benefit analysis.

The United States has, by far, the highest prisoner population in the world. Not just the highestproportion of people locked up, but the highest number in the world (2.3 million people). With less than 5% of the world’s population, the U.S. holds over 20% of the world’s prisoners. What is the return on that investment of our tax dollars?

Last April, the White House held a bipartisan conference of economists and policy analysts to look at our criminal justice system through an economic lens. As part of the conference, the White House Council of Economic Advisers released a 79-page report, which is available online, titled “Economic Perspectives on Incarceration and the Criminal Justice System.”

Looking at this problem from an economic cost-benefit point of view should not be the only, or perhaps even the primary, reason for us to be concerned about over-incarceration. But it is one way of looking at the problem, and it is one that helps to make this a bipartisan issue. For example, one Republican who spoke at the White House meeting, and who served on George W. Bush’s Council of Economic Advisors, called criminal justice reform a “rare public-policy moment” that offers both parties a chance to save taxpayers money, help more people into jobs, strengthen families, and reduce poverty without sacrificing public safety.

We have allowed politicians to overspend on incarceration rather than more cost-effective solutions, such as hiring more police and focusing on areas of high-crime. For example, the U.S. employs two-and-a-half times more corrections officers per person than the global average, but 30% fewer police.

The Obama administration’s recent decision to phase out the use of private for-profit prisons for federal prisoners is a welcome step in the right direction. But federal prisoners are a relatively small segment of the U.S. prison population overall. According to The Economist, there are 2.3 million people behind bars in the U.S. 193,000 are in federal prisons. Approximately 22,000 of those are in facilities run by for-profit companies.

After years of passing 3-strikes laws, mandatory minimums, and harsh sentences for non-violent drug offenders, we have created a system of staggering numbers. Thankfully, we are hearing more and more about criminal justice reform from members of both major parties. There is much to be done in this area. I want to urge all concerned citizens to keep a sharp focus on this issue. I think there are few issues that touch so many aspects of our social and economic problems, and that provide such an opportunity for bipartisan cooperation.