Economic Perspectives on Incarceration and the Criminal Justice System

Executive Summary: Calls for criminal justice reform have been mounting in recent years, in large part due to the extraordinarily high levels of incarceration in the United States. Today, the incarcerated population is 4.5 times larger than in 1980, with approximately 2.2 million people in the United States behind bars, including individuals in Federal and State prisons as well as local jails. The push for reform comes from many angles, from the high financial cost of maintaining current levels of incarceration to the humanitarian consequences of detaining more individuals than any other country.

Report Highlights

1. In recent decades, the U.S. incarcerated population has grown dramatically, despite falling crime rates.
2. Growth in U.S. incarceration has been fueled by criminal justice policies.
3. Interactions with the criminal justice system are disproportionately concentrated among Blacks and Hispanics, poor individuals, and individuals with high rates of mental illness and substance abuse.
4. Economics can provide a useful lens for thinking about the costs and benefits of criminal justice reform.
5. Improving safety and reducing crime are central goals of the criminal justice system.
6. Criminal justice policies have the capacity to reduce crime, but the aggregate crime-reducing benefits of incarceration are small and decline as the incarcerated population grows.
7. Investments in police and policies that improve labor market opportunity and educational attainment are likely to have greater crime-reducing benefits than additional incarceration.
8. The direct government costs of the criminal justice system are significant.
9. Criminal justice policies also generate a number of indirect costs, or collateral consequences, for individuals with criminal records, their families, and their communities.
10. Given the total costs, some criminal justice policies, including increased incarceration, fail a cost-benefit test.

 $ $10 billion dollar increase in incarceration spending would reduce crime by 1 to 4 percent (or 55,000 to 340,000 crimes) and have a net societal benefit of -$8 billion to $1 billion dollars.

o   At the same time, a $10 billion dollar investment in police hiring would decrease crime by 5 to 16 percent (440,000 to 1.5 million crimes) have a net societal benefit of $4 to $38 billion dollars.

o   Drawing on literature that finds that higher wages for low-income individuals reduce crime by providing viable and sustainable employment, CEA finds that raising the minimum wage to $12 by 2020 would result in a 3 to 5 percent crime decrease (250,000 to 510,000 crimes) and a societal benefit of $8 to $17 billion dollars.

The Administration is committed to a holistic approach to criminal justice reform that creates a fairer and smarter system in the community, the cell block and the courtroom.

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