Eakinomics: Benefits, Costs, and the Criminal Justice System

Eakinomics: Benefits, Costs, and the Criminal Justice System Not long ago, in the wake of deaths and widespread civic unrest, it was widely assumed that Congress would pass legislation to reform policing practices. While this effort has seemingly stalled for the moment, there remains heightened interest in the structure and impacts of the U.S. system of criminal justice. The latest piece from AAF’s Tara O’Neill Hayes provides considerable food for thought on this topic. Recall that there are 2.2 million people incarcerated in the United States, yielding an incarceration rate that is over four times greater than it was a half century ago and the highest of any country in the world. Hayes points out that the direct governmental cost of our corrections and criminal justice system was $295.6 billion in 2016. Roughly half of the cost is for police protection, while the cost of operating prisons, jails, and parole and probation systems comes to $90 billion. The remainder covers the judicial and legal systems. Local governments pay more than half of the total – mostly for policing – the federal government pays only one-sixth, and the states’ share is spent largely on corrections because 1.3 million people are held in state prisons. That’s big money but, as it turns out, it pales in comparison to the lost earnings, adverse health effects, damage to the families of the incarcerated, and other societal costs of the system. A review of the literature in this area reveals that the estimates cluster in the range of three times the direct costs. If so, the total cost of the criminal justice system is in the vicinity of $1.2 trillion. Hayes goes on to point out that the current system generates seemingly small amounts of reduced crime – deterrence – and a high rate of recidivism, which is a different aspect of low deterrence. Lots of costs for small benefits sounds like a data-driven case to scrap the existing system. Not quite. The catch is that what matters in a well-executed benefit-cost test is the value a society places on that deterrence. This involves two tricky aspects of evaluating public policy: (a) finding a way to infer the monetary equivalent of the value a person puts on the deterrence, and (b) making a judgment about the importance of one person’s value versus another’s. For example, does one simply add up the values, or are the valuations of some more important than others? So, a genuine benefit-cost test is beyond the scope of the research at the moment. But given the size of the costs, it is safe to say that as a matter of logic the benefits must be substantial to merit incurring the measured costs.