The Cost of Prison

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            Faced with a glaring deficit and terrifying examples of ineffective spending around the globe, lawmakers looking for cost-saving measures would do well to turn to prisons. Prison reform must attain the lowest economic costs, lowering actual taxpayer dollars spent without giving up the benefits of attaining important social goals, which represent another form of cost when lost. Undoubtedly, the current prison system is doing little to separate the US from its international counterparts in minimizing such cost, yet prison privatization has yielded hopeful results, as private correctional facilities seem to have a striking advantage over public ones in reducing both short-term costs in terms of prison operations, and long-terms costs, in terms of lower recidivism rates through better rehabilitation. Still, the political economy involved in setting up private prisons presents increased social problems because of too much lobbying involvement and counter-cost-minimizing results. Through maintaining competition, changing the reasons why private prisons are set up and how, society can move forward to minimize economic costs. While most all citizens recognize the need to fund and support incarceration, few realize how tremendous the costs they face truly are. The US continues to incarcerate a higher percentage of its population than any other country in the world, with over 2.3 million people in prison or jail as of 2008 (John Schmitt, 2010). Last year, approximately 753 of every 100,000 people were locked up, up from just 220 in 1980 (Schmitt, 2010). This tremendous growth in imprisonment, mainly to working-aged men for violent crimes, has coincided with similarly remarkable increases in spending. From 1996 to 2001, the country witnessed “a $5½ billion increase [in spending] after adjusting for inflation”, and in the 15 year stretch between 1986 and 2001, “state correctional expenditures increased 145% in 2001 constant dollars” (James J. Stephan, 2001). Perhaps citizens would grow more wary of the problem if they knew that state prison costs per US resident were $104 in 2001. Compared with other state expenditures as cost per resident, that is nearly double what is spent on natural resources, and only $50 less than per-capita spending on health (using 2001 based dollar value) (Stephan, 2001). As public goods, it is difficult to account for how much individuals truly value any of these expenditures. Lindahl pricing, wherein individuals honestly reveal what they would spend on certain goods and the government charges them that amount, is impossible in the absence of perfect information, and contains a contingent valuation problem in that individuals would be choosing an option they never had before (Gruber, 2011). However, these figures mean that citizens are paying more for the same service over the years, especially when analyzing the long-term implications of recidivism. If an adult career criminal is defined as one who spends nearly 8 years in prison and whose “crime career” is at least six years, “external costs of a life of crime range from $1. 5 to $ 1. 8 million”—the summation of $ 165,000 in victim costs per year of a criminal's career, $40,000 per year in the criminal justice system, and approximately $60,000 in foregone earnings in 1997 dollars (Mark Cohen, 1998). The cost is slightly over $2 million in today’s terms. The current incarceration system has been able to do little to combat such career criminals, or prison reentry, as a 15 state study found that “over two-thirds of released prisoners were rearrested within three years” over the course of the past decade (BJS, 2007). The study also found rearrest rates to be “.5 percent higher than that among prisoners released during 1983” (BJS, 2007). A struggling rehabilitation system ultimately has long-term costs upon society and prisons specifically, as taxpayers will be forced to bear the cost of re-incarceration. This data suggests that not only are...
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