Society and Culture

What economics can teach us about prisons


Tax and Fiscal Policy
Economics teaches us that prisons do not work. Crime costs the UK economy hundreds of millions of pounds every year and prisons have a minimal impact on crime. Prisons do not act as a deterrent to crime: people who commit crimes either act from impulse or do not think they will get caught. Indeed, the vast majority do not get caught. In 2014, police were unable to find a suspect in half the crimes reported to them.

Value for money is particularly poor. UK government departments are routinely brought in front of the Parliament’s Public Accounts Committee to explain themselves if money is wasted. The Ministry of Justice, with an annual budget of some £7bn, should receive greater scrutiny. The average cost of keeping someone in prison is £30,000 to £40,000 a year – more than most expensive private boarding schools. Yet re-offending rates are nearly 60 per cent for those in jail for less than 12 months, and the cost to the economy from re-offending alone is estimated at some £9.5bn to £13bn a year.

Economics gives us the tools to evaluate policies to test correlations and prove causality. But we ignore the fact that most known forms of crime have been falling consistently.  This is true both for crimes reported to the police and those that are outlined in the annual crime surveys. Why is this? It is not because we have doubled the prison population in the last 20 years. The decline is due to other factors. Getting richer helps: there is more to lose if caught. So is getting older as a nation: peak crime age is around 24. Better security technology also contributes: automated cash tills make it more difficult to commit retail crime and increased use of sophisticated locks and alarms acts as a deterrent. And so on…

In truth, people in prison are there in greater numbers because there are more offences now classified as meriting a custodial sentence and tighter sentencing policy has resulted in longer sentences. And yet there is no evidence that raising a sentence from say two to four months or from three to five years makes any difference to the likelihood that someone will commit the relevant crime. What the evidence does suggest is that the only thing that might affect the willingness to commit a crime is the absolute certainty of being caught. This implies much more money spent on detection. This will not be easy as resources are being cut back aggressively.

Alternative solutions, such as community sentencing are less costly and have a much lower re-offending rate. Even more important is understanding what does reduce crime. Offenders tend, on average, to be under-educated and much more likely to be unemployed than the rest of the population. Women prisoners  are known to have already been vulnerable before committing crimes with 50 per cent of them victims of domestic abuse and one in three victims of sexual abuse. Many are drug and alcohol dependent. Furthermore, whereas only 1 per cent of children are in care in the UK, about a quarter of adult prisoners have been in care at some point in their lives.

And then, on leaving prison, life chances decrease. It is harder to get a house, to obtain credit or insurance, and to get a job. Only 25 per cent of prisoners enter employment on release – and their children who had been separated from them are more likely to offend too at some stage.

Keeping people in the community, tackling mental health issues and better education and employment are key to reducing crime. That is what the economic evidence suggests and where the emphasis of policy should be.

Vicky Pryce is the author of ‘Prisonomics’, Biteback Publishing, and is a patron of Working Chance, a charity that finds quality jobs for women ex-offenders.

3 thoughts on “What economics can teach us about prisons”

  1. Posted 15/03/2016 at 13:56 | Permalink

    Far too many people leave secondary education, after twelve years compulsory schooling, unable properly to read, write and do arithmetic. A figure of twenty per cent is widely quoted. For years the Department of Education supported a system of teaching children to read that was ineffective. And when, as a result, many unfortunate and inadequate people end up in prison, the system fails to remedy the situation by at last teaching its captive audience to read. A Level Economics talks a lot about ‘market failure’, but here is a glaring example of government failure leading to much human misery and a huge waste of taxpayers money.

  2. Posted 16/03/2016 at 10:50 | Permalink

    I have to take issue with the claim that “Prisons do not act as a deterrent to crime”. There is a small group for whom that is the case – and that group is the recidivists who, as you say, have a high re-offending rate, and are being sub-optimally helped by the prison system. But saying that prison isn’t fit for purpose because of high re-offending rates is an absurd complaint, and a peculiar error of reasoning. It’s a bit like complaining that sea defences aren’t fit for purpose because occasionally there are extreme coastal conditions that break those barriers. It would be good if the sea defences prevented all flooding, but their primary job is to protect the land from the ordinary thrust of the sea on a daily basis. Similarly, prison’s primary function is to reduce offending (by deterrence and by keeping criminals out of society), not re-offending. If it reduces re-offending then all well and good, but that is not its primary function.

    It’s preposterous to consider whether prison is fit for purpose by only considering the recidivism rates. It’s as preposterous as considering how many men in the UK take steroids by only interviewing weight-trainers in gymnasiums. Such a biased research method would drastically skew the overall figures, and this is what is happening with Vicky Pryce’s “Prisons do not act as a deterrent to crime” claim, as recidivists are people who’ve already been convicted of a crime, so they are people for whom the threat of prison was no real deterrent first time out. Consequently, they are the biased sample of the population for whom prison is the least likely to be a deterrent second time around.

    The only proper way to enquire whether prison is fit for purpose is to ask how much of a deterrent it is for the vast majority of people in the UK – those who haven’t found themselves outside of the orbit of the law. As far as we can gather, the threat of prison, loss of liberty, loss of employment, and so forth has been a very successful deterrent for a majority of the population.

    This is compounded by the fact that when it comes to the change in social status from being an ordinary citizen to a convicted criminal, the first cut really is the deepest. That is to say, the first time a recidivist became a criminal was the worst time for him (or her). It was on that first occasion that he became incarcerated, when up until then he had only been used to freedom, and it was then that he first experienced the change in status that would give him a social stigma and make him harder to employ. If that wasn’t a sufficient deterrent, we shouldn’t be too surprised that criminals are even less likely to be deterred second time around.

    I should finish by saying that it’s only on that point I have a quibble – I agree with the rest of the article.



  3. Posted 05/04/2016 at 23:44 | Permalink

    Suggest Ms Price familiarize herself with the Marks System, invented by prison reformer Alexander_Maconochie.

    Economics should be a study about how aligning incentives, maximizes wealth and welfare. This applies to how we deal with criminals.

    I believe the only political party in the UK that advocates a Marks System for how we sentence prisoners is the Young Peoples Party (YPPUK)

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