Taking the Charter School Approach to Prison

Posted: May 21, 2015 by Prison Entrepreneurship Program (PEP) in About PEP

A Wall Street Journal article suggests paying private jail operators the same as state facilities, but giving them incentives to lower recidivism rates. Read the full story here.


America spends a lot of money locking up a lot of people. Understandably, legislators are trying to find ways of cutting prison costs without increasing crime rates. One tactic legislators increasingly rely on to manage costs is private prisons. Research from the Sentencing Project shows that, between 1999 and 2010, the share of U.S. prisoners housed in private prisons grew by more than 50%. What those prisons need, however, is an incentive to do better than public institutions—and a hint from a successful part of the U.S. education system.

Legislators are right to harness the power of market incentives to reduce costs. Given the right economic incentives, the private sector can be more efficient and creative than government.

Yet private prisons are failing to do the two things they should do best: reducing costs and recidivism rates. Research from Yale University has shown that, after controlling for demographics and the type of crime committed, private prisons have higher recidivism rates than government-run prisons. Research from the University of Wisconsin has also shown that, compared with publicly operated prisons, private-prison inmates serve a larger fraction of their sentences and are more likely to receive an infraction for poor behavior that can prolong their prison stay.

While the Wisconsin research didn’t pinpoint the source of the increased infractions, there are two reasons private prisons have higher infractions. First, private prisons earn more revenue when inmates serve more of their sentence. Second, private prisons’ cost-cutting measures—such as reduced staffing and more cramped quarters—lead to more violence among inmates.

Above all, private prisons have worse outcomes because of current economic incentives. At present their performance is measured exclusively by how little they spend per prisoner day. There is no incentive to reduce recidivism rates—even though less recidivism means both lower crime rates and lower costs to taxpayers. High recidivism rates ensure private prisons a stable and growing stream of future “customers.”

Because of these incentives, private-prison operators provide little job training to inmates and their cost-cutting often reduces inmates’ contacts with their families. For instance, some creative private prisons even require prisoners to pay as much as $1 per minute for video conference calls with families instead of permitting face-to-face visitation. This even though job training and maintaining ties with families are known to reduce recidivism.

It doesn’t have to be this way. The key is to structure private-prison compensation as a function of outcomes. If a prison underperforms on recidivism rates relative to government counterparts, the prison should receive a smaller share of inmates or be shut down. It may even be possible to make the contract between the fiscal authority and the private-prison operator explicitly dependent on recidivism rates. Providing such incentives will ensure that private prisons use evidence-based best practices—such as providing job training and maintaining connections to family—and encourage private prisons to experiment with new ways of reducing recidivism.

The model of charter schools is a good way to start rethinking private prisons. Charter schools in most states receive the same public funding per student as publicly-run schools, but charters are free to experiment with how best to use that funding to educate students according to the state curriculum.

While research is mixed about whether the average charter school outperforms traditional public schools, studies that focus on charter schools in high demand that must use lotteries to allocate slots have shown that the top charter schools vastly outperform traditional public schools on value-added measures. Successful charter schools, such as KIPP, Harlem Success Academy, and BASIS, thrive financially and are often able to establish several branches based on their reputations.

Private prisons should receive the same funding from the government per prison sentence as public prisons do. Private-prison operators should then be free to use the money to best reduce recidivism rates. Successful private-prison operators could receive more “customers” as they show legislators that their techniques work to reduce overall costs and crime rates.

Charter prisons aren’t a panacea to America’s prison problem. But shouldn’t we make sure that the incentives we provide give the market solution the best shot?

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