Economic Perspectives on Incarceration and 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.

Economic analysis is a useful lens for understanding the costs, benefits, and consequences of incarceration and other criminal justice policies. In this report, we first examine historical growth in criminal justice enforcement and incarceration along with its causes. We then develop a general framework for evaluating criminal justice policy, weighing its crime-reducing benefits against its direct government costs and indirect costs for individuals, families, and communities. Finally, we describe the Administration’s holistic approach to criminal justice reform through policies that impact the community, the cell block, and the courtroom. U.S. incarceration has grown rapidly over the last three and a half decades, driven by changes in criminal justice policy, not underlying changes in crime. In recent decades, the U.S. incarcerated population has grown dramatically, despite falling crime rates. 

• Adjusting for population, the incarceration rate grew by more than 220 percent between 1980 and 2014. The U.S. incarceration rate is higher than the any other country in the OECD, and is more than four times the world average. 
 

• At the same time, crime rates have fallen sharply; between 1980 and 2014 violent crime rates fell by 39 percent and property crime rates fell by 52 percent. 

• Economic research has found that incarceration growth is unlikely to be a root cause of the drop in crime. Instead, research finds that the decrease in crime may be attributable to a number of other factors, including demographic changes, changes in policing tactics, and improving economic conditions. 

Growth in U.S. incarceration has been fueled by criminal justice policies.