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By Giulio Fella and Giovanni Gallipoli

Crime is a hot issue on the policy agenda in the United States. Despite a significant fall in crime levels during the 1990s, the costs to taxpayers have soared together with the prison population. The US prison population has doubled since the early 1980s and currently stands at over 2 million inmates. According to the latest World Prison Population List (ICPS, 2013), the prison population rate in 2012 stood at 716 inmates per 100,000 inhabitants, against about 480 in the United Kingdom and the Russian Federation – the two OECD countries with the next highest rates – and against a European average of 154. The rise in the prison population is not just a phenomenon in the United States. Over the last twenty years, prison population rates have grown by over 20% in almost all countries in the European Union and by at least 40% in one half of them. The pattern appears remarkably similar in other regions, with a growth of 50% in Australia, 38% in New Zealand and about 6% worldwide.

In many countries – such as the United States and Canada – this fast-paced growth has occurred against a backdrop of stable or decreasing crime rates and is mostly due to mandatory and longer prison sentencing for non-violent offenders. But how much does prison actually cost? And who goes to jail?

The average annual cost per prison inmate in the United States was close to 30,000 dollars in 2008. Costs are even higher in countries like the United Kingdom and Canada. Punishment is an expensive business. These figures have prompted a shift of interest, among both academics and policymakers, from tougher sentencing to other forms of intervention. Prison populations overwhelmingly consist of individuals with poor education and even poorer job prospects. Over 70% of US inmates in 1997 did not have a high school degree. In an influential paper, Lochner and Moretti (2004) establish a sizable negative effect of education, in particular of high school graduation, on crime. There is also a growing body of evidence on the positive effect of education subsidies on school completion rates. In light of this evidence, and given the monetary and human costs of crime, it is crucial to quantify the relative benefits of policies promoting incarceration vis-à-vis alternatives such as boosting educational attainment, and in particular high school graduation.

When it comes to reducing crime, prevention may be more efficient than punishment. Resources devoted to running jails could profitably be employed in productive activities if the same crime reduction could be achieved through prevention.

Establishing which policies are more efficient requires a framework that accounts for individuals’ responses to alternative policies and can compare their costs and benefits. In other words, one needs a model of education and crime choices that allows for realistic heterogeneity in individuals’ labor market opportunities and propensity to engage in property crime. Crucially, this analysis must be empirically relevant and account for several features of the data, in particular for the crime response to changes in enrollment rates and the enrollment response to graduation subsidies.

The findings from this type of exercise are fairly clear and robust. For the same crime reduction, subsidizing high school graduation entails large output and efficiency gains that are absent in the case of tougher sentences. By improving the education composition of the labor force, education subsidies increase the differential between labor market and illegal returns for the average worker and reduce crime rates. The increase in average productivity is also reflected in higher aggregate output. The responses in crime rate and output are large. A subsidy equivalent to about 9% of average labor earnings during each of the last two years of high school induces almost a 10% drop in the property crime rate and a significant increase in aggregate output. The associated welfare gain for the average worker is even larger, as education subsidies weaken the link between family background and lifetime outcomes. In fact, one can show that the welfare gains are twice as large as the output gains. This compares to negligible output and welfare gains in the case of increased punishment. These results survive a variety of robustness checks and alternative assumptions about individual differences in crime propensity and labor market opportunities.

To sum up, the main message is that, although interventions which improve lifetime outcomes may take time to deliver results, given enough time they appear to be a superior way to reduce crime. We hope this research will advance the debate on the relative benefits of alternative policies.

Giulio Fella is a Senior Lecturer in the School of Economics and Finance at Queen Mary University, United Kingdom. Giovanni Gallipoli is an Associate Professor at the Vancouver School of Economics (University of British Columbia) in Canada. They are the co-authors of the paper ‘Education and Crime over the Life Cycle‘ in the Review of Economic Studies.

Review of Economic Studies aims to encourage research in theoretical and applied economics, especially by young economists. It is widely recognised as one of the core top-five economics journal, with a reputation for publishing path-breaking papers, and is essential reading for economists.

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Image credit: Prison, © rook76, via iStock Photo.

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On Friday, I took my students to the Baltimore City Detention Center to draw and interview some of the inmates in Cell Block E. I am most grateful to Dr. Kevin McCamant for working all semester to help make this a reality for us. Dr. McCamant is a psychologist who works with MICA’s community arts program to use art therapy with the inmates there. Most inmates on Block E are in for light crimes like, theft, vandalism, and trespassing. However, there are a few who are in for more serious crimes. To be clear, the detention center is NOT a prison. The men there are awaiting trial. In my understanding the men there cannot be held over three years. Most of the men I talked to had only been there between 2 months and a year. Longer sentences are carried out in prison.

Before entering the facility we all had to pass security inspection, which meant removing all jackets, sweaters, coats, jewelry, watches, and sometimes shoes (similar to what you would do to pass airport security). Afterwards we had to walk through a metal detector. One student and I did not pass the metal detector due to the metal in our underwire garments and had to wait for a supervisor to scan us with a wand before heading upstairs. Once we walked through a few corridors and many locking gates, we arrived in the dayroom where some of the inmates were having lunch – not unlike what you would see in any high school cafeteria.

The day went very well. The men were happy to see fresh faces from outside and have their likenesses drawn. The students and I enjoyed the stories that they shared about their families, talents, and passions. One of my students joined me in walking down to draw some of the cells. I chose cell 49 and after bringing the drawing back to share, the men teased Clarence, it’s inhabitant, because of the messy state of his dormitory. In contrast, my student drew cell 48, which was very neat and tiny. When he shared the drawing, the inmate it belonged to beamed with pride at his neatness.

The experience was valuable to all. I personally thought about institutionalization and how we are all conditioned at a very young age. There wasn’t much difference between the environments of public school and the detention center. Both are under very strict supervision and rules. We are told when to eat, when to use the restroom, when to go outside (a lot of men hadn’t seen the outdoors in months). I am much more sympathetic now to the “problem children” from my days in elementary, middle, and high school who acted out and struggled with performance in that very rigid climate. It is a highly sterile and unnatural environment. I think of myself, who was a model student. I stayed in line, didn’t question the authority in place and made it through the system sucessfully in order to become a “model citizen”; therefore reinforcing the system and the production of more and more model citizens . . . drones . . . slaves . . . etc.

You gotta be careful in here, kid. You may be wearin’ your stripes, but you ain’t earned your stripes. Go it alone and you’ll make mistakes. You’ll hitch yourself to the wrong post, get saddled up and sold to the highest bidder. Stick by me and you might stand half a chance, but you’re gonna hafta listen.

…

What’s that?

…

Oh, that’d be on Tuesdays. Not a bad spread. Pickles. Onions. Standard. You’ll learn the menu. More important is this here yard. How you carry yourself. Who you trust. Take that fella at the bench press for example, the one with the dark beard and forearms thick as your chest. Name’s Bluto. Doin’ a dime for kidnappin’ a woman. That’s right, a sailor man’s wife. Threw her over his shoulder and took her down to the docks. Oh, he’ll rough you up right, but keep a can of spinach in your hip pocket and he’ll think twice. I don’t understand the science, but that there is the formula. Spinach.

…

Agreed, kid. Coupla sizzlin’ patties will beat a can o’ the green any yesterday or tomorrow, but that’s not what we’re talkin’. We’re talkin’ today and today is about the disco and the disco is about stayin’ alive. Have a look here. Skinny character sporting the lime suit? Question mark on his chest? That don’t mean he’s the information booth. No sir. Say a word to that crafty SOB and he’ll come at you like the Sphinx, all riddles ‘n giggles. Next thing you know you’ll be chummin’ around with a psycho circus clown and runnin’ from some pointy-eared, gravelly voiced vigilante. No. Thank. You. Best to steer clear of that riddler entirely.

…

Beats me! I wouldn’t know if his riddles are about ground beef or ground cinnamon for that matter, because I don’t talk to the man! Aren’t you listenin’? Better be. Your eyes ain’t gonna tell you what my twenty-seven years behind this barbed wire knows to be true. Another example. You probably look over at that strung-out orange beaky guy and think, “well that’s just some ol’ cuckoo junkie.” You’d be right about that. But that ol’ cuckoo junkie goes by the name of Sonny, and Sonny knows where to score the sweet stuff, if you catch my meaning. Sonny is just cuckoo for it, smuggles it past the guards in cereal boxes. You want a taste, that’s your bird.

…

I guess he could get you some, but why not wait till Tuesday? Like I said, they fire up that flame-broiler on Tuesdays. Sonny’s got no time to bother with no fast-food. Wisen up, boy, or you’ll end up runnin’ with them Hanna Barberas and let me tell you, that gang’s no Laff-a-Lympics. Sure, some of them hustlas may talk a soft game, soundin’ like Casey Casem or Paul Lynde, but they will be quick to shank a new fish if they even suspect you’re conspirin’ with the ascotted and far-sighted and snack-gobblin’ brand o’ meddlin’ teenagers. Dig? Of course you don’t. I’m not spellin’ it out in ketchup. These are the type of gangstas that dress as ghosts and swamp thangs and go hauntin’ just so they can shut down orphanages! That enough to scare you? Oh and don’t get me started on the Orphans! That’s another gang. A more Dickensian band of bandits you have not seen. If it ain’t your porridge they’re after, it’s your inheritance. You work the chimney sweep detail and you’ll be pits-deep in those mangy lads, singing show-tunes while they pick your pocket. You’re better off

Yesterday, I had a great opportunity to participate in a phone conversation with my friend Amira, an Egyptian-American living in NYC and a group of incarcerated teens at a local jail who have been watching the news unfold for over two weeks about the Middle Eastern country of Egypt.

Through the Global Kids organization in NYC, Amira has done digital projects virtually with teens at the jail near me, so she is not new collaborating with us in that sense. The guys had been following events in Egypt such as the recent PBS Frontline episode, Revolution in Cairo, BBC news coverage, and social media such as Facebook and Twitter to look at how it was being leveraged to create the movement that many of us are familiar with seeing.

The teens came to the conversation with an amazing foundation fostered by the Librarian at the jail. Before being exposed to this media, some of the questions the guys had were on the order of, “where in the world is Egypt?” which changed to learning about how they as youth were capable of creating change in their own communities, neighborhoods, and situations, just like the youth they had seen and read about in the news.

As a follow-up to the phone conference, we plan to engage the young men with what local issues they are interested in tackling. I can share that in a blog post next week.