How many US prisons are private

Conclusion - the business blog

Many prisons in America are privately owned. This is not an advantage for the prisoners. The supply creates its demand.

Iudex non calculat, the judge doesn't calculate. This is how it is passed down from Roman law. But what does that mean? Cynics read from it an aversion of the legal profession to the apparently disgraceful economic. A more common interpretation of the phrase refers to the fact that arithmetic errors in a judgment must be corrected by the court at any time and the judge therefore does not need any arithmetic skills.

The ruling also serves as an indication that court judgments cannot be justified mathematically and that they live from the judge's judgment. Nowhere is this clearer than in Anglo-Saxon judicial law, in which the judges have a lot of leeway when deciding on guilt and atonement, including for considerations outside the statutory framework.

One such influencing factor outside the legal framework could be the existence of private prisons. This is a hot topic in the United States. Ever since private prisons emerged in the mid-1980s, there has been suspicion that prisons as a business model have contributed to the rapid increase in prison inmates in America. The number of inmates has roughly doubled since 1985 and has grown much faster than the population. The assumption that the existence of private prisons has something to do with it cannot be dismissed at first glance. Private prison operators want to make a profit and have an interest in the fact that there are more prisoners and that they are incarcerated for longer.

Privatization in the war on drugs

But can this assumption be proven in reality? The economists Christian Dippel and Michael Poyker went on a search, and in this case that means using statistics and data. The genesis of private prisons in the United States initially suggests a different connection. Private prisons then served to solve a problem: with the "war on drugs" that American President Richard Nixon proclaimed in 1971, the number of prisoners rose rapidly. Overcrowded prisons and rising costs put a strain on governments at all levels of government. This is why private prisons appeared to be a practical way out, as providers promised to lock prisoners away more cheaply.

The logic is the same as in the privatization of other public services that were formerly provided by state bureaucracies in a monopoly. Think of phone calls, sending letters or taking the train. All of these services got cheaper and better. The market for private prisons in America is now valued at around five billion dollars. Around six percent of state prisoners and 16 percent of federal prisoners are cared for in the private sector.

Has the move of the private sector into the penal system increased the number of prisoners? Dippel and Poyker examined the criminal sentences of several decades from 13 states in more detail: from 252 districts that lie on the respective state borders. This geographical restriction is important because it enables direct comparisons across national borders.

The supply creates its demand

The econometric tests first show that the availability of private prisons has little or no influence on the likelihood of being convicted. Another result is significant and quite robust: the more private prisons there are in a state, the longer the prison sentences. Specifically, this means that if the capacity of private prisons doubles, the length of prison sentences increases by 1.3 percent or 23 days. This is a small effect that can still be very negative for the individual prisoner. According to the study, the connection seems to be independent of the age or race of the defendants. The often heard accusation that private prisons disadvantage black Americans is therefore not true.

The question of why is exciting. How is it that the length of prison sentences increases with the number of private prisons? The two economists offer three possible explanations. First, providers of private prisons could try to use gifts or lobbying to influence MPs to make higher sentences legally binding. The test method in the study does not allow investigating this possible influence, the authors write. Pity!

Second, prison companies could try to influence judges towards longer sentences. Presents or donations during the election campaign could widen the ears of the judges to whisperings, because in some states the judges are not appointed by the state but are elected by the population. Such influence should be particularly evident when the judges are up for re-election and this circumstance is reflected in longer or more prison sentences. However, the data examined by Dippel and Poyker do not support this assumption.

Do judges calculate?

The third possible reason for the phenomenon remains that economic rationality comes into its own. The cost of incarceration is typically lower in private prisons, as some states require providers to cost less per prisoner than state prisons. Kentucky, Mississippi and Texas oblige the providers of private prisons to be ten percent cheaper than the public competition. Five percent less is enough for the state of Tennessee.

In the authors' tests, this economic component turns out to be the most likely argument to explain the relationship between private prisons and length of detention. The analysis suggests that criminal judges are considerate of the limited financial resources of the states and impose shorter sentences when fewer cheaper private prisons are available. The statistical-econometric tests are of course not conclusive evidence. But it almost looks as if American criminal judges are calculating after all.

Christian Dippel, Michael Poyker: Do Private Prisons Affect Criminal Sentencing? NBER Working Paper No. 25715, National Bureau of Economic Research, March 2019.

Christian Dippel, Michael Poyker: How Common Are Electoral Cycles in Criminal Sentencing? NBER Working Paper No. 25716, National Bureau of Economic Research, March 2019.

The text was published as “Sunday Economist” on April 14 in the Frankfurter Allgemeine Sonntagszeitung.

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Keywords: Christian Dippel, common law, prison, Iudex non calculat, Law and Economics, Michael Poyker, privatization, judicial law
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Sitting longer in private jail

From Patrick Welter

Many prisons in America are privately owned. This is not an advantage for the prisoners. The supply creates its demand.

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