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Institute for Policy Integrity Cost-benefit Analysis and Criminal Justice Policy 2011

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Balanced Justice:
Cost-Benefit Analysis and Criminal Justice Policy
Center for the
Administration of
Criminal Law
New York University
School of Law

Jennifer Rosenberg
Policy Brief No. 11
October 2011

Crime and justice are not usually associated with cost-benefit analysis. But they should be.
A growing body of research shows how powerful the use of economic analysis can be when applied
to criminal justice policy. Public safety can be prioritized and even improved at a lower cost than
traditional incarceration, using techniques like behavioral therapy for young offenders, intensive
supervision, or a new iteration of a drug court.
In an economic downturn, when state funding is scarce and legislatures are on the lookout for even
the smallest of budget cuts, what could be more compelling than better results with a smaller price
tag? Cost-benefit analysis can give state and federal lawmakers a more targeted way to identify and
adopt sentencing structures and preventative programs that will save billions of taxpayer dollars
without compromising public safety.
Around the country, research findings are being compiled and analyzed to identify policies that
achieve desired outcomes and offer taxpayers high rates of return on their investments. In many
cases, credible research shows that the administrative costs of implementing a new program can be
dwarfed by future benefits. These benefits spring from not only reductions in crime and avoided
sentencing costs, but also increased lifetime earnings and health outcomes.
In these and other ways, cost-benefit analysis injects data-driven methods and evidencebased practices into criminal justice policymaking. The outcome: comprehensive, line-item
comparisons of criminal justice policy alternatives. Once each policy or program option is
subjected to cost-benefit analysis, the results are presented side-by-side allowing lawmakers to
select that which promises to generate the greatest net benefits.
Cost-benefit analysis can be applied to a range of programs, from sentencing and parole guidelines,
to family therapy programs targeting “at risk” youth. There are also challenges to utilizing costbenefit analysis, including the need for additional research and funding for that research. Yet
momentum is building and decisionmakers throughout the justice system—from sentencing
boards, to judges, to prosecutors, to legislators—are seeing the fiscal savings and public safety
improvements that cost-benefit analysis can provide.

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Rethinking Policy
The Value of Cost-Benefit Analysis
to Criminal Justice

Cost-Benefit Analysis
In the 1960s, crime rates in the United States rose to record levels. Policymakers on both sides of
the aisle responded with stricter criminal policies that included mandatory minimum sentences
and longer periods of incarceration. 1 While a range of factors fueled the subsequent incarceration
boom—a phenomenon that continues in many jurisdictions today—almost entirely missing
from the debate were analytical tools and evidence-based methodologies. Historically, decisions
concerning criminal justice policy have been driven largely by political and ideological interests,
and unscientific speculation over the causes and effects of crime. This stands in contrast to other
aras of public policy, where decisions are grounded in concrete research and hard data.2 Since
the early 1980s, the federal government has placed cost-benefit analysis at the centerpiece of
regulatory decisionmaking in a range of policy areas, including environmental protection, public
health, and consumer safety.3 In the subsequent years, a number of federal agencies became
experts in this methodology, and their regulations have tended to generate benefits that far
outstrip costs.4 In the criminal justice world, however, cost-benefit analysis has only just begun
to gain traction.
Cost-benefit analysis can help reform outmoded ways of thinking about criminal justice, and
rationalize criminal justice policymaking. It offers a systematized approach for gathering all
available information, looking at competing courses of action, and anticipating their likely
consequences. It provides policymakers with hard data on the utility and cost-effectiveness of
alternative options. In the state of Washington, a national leader in this emerging field, juvenile
and adult crime rates have dropped, recidivism is down, and taxpayers have saved tens of millions
of dollars through reliance on cost-benefit analysis in criminal justice policymaking.5
To get there, cost-benefit analysis engages in the quantification of the costs and benefits of
different policies, which allows for direct comparisons along a common scale. Both costs and
benefits are monetized in dollar terms. The total expected costs of a particular intervention or
program are then subtracted from the total expected benefits, and the policy with the greatest
net benefits is selected. Stated more simply, the results show which interventions or programs
provide taxpayers the biggest bang for their buck. States that are at the vanguard of applying
cost-benefit analysis to criminal justice policies have already proven that win-win policies and
programs—those which save taxpayers significant amounts of money and reduce crime rates—
are possible.

Insights of Cost-Benefit Analysis 	
Cost-benefit analysis is still relatively new to criminal justice discourse. Its utilization is an
emerging trend, but the handful of programs to which it has been applied demonstrates its broad
appeal. Cost-benefit analysis can be used to evaluate a wide range of programs, from sentencing
policies and corrections measures to law enforcement and youth crime intervention programs.
Research institutions have used cost-benefit analysis to evaluate the effectiveness of drug courts6
and mental health courts;7 electronic monitoring programs for parolees and probationers;8 and
re-entry services for parolees.9

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Number of People Incarcerated under
State and Federal Jurisdiction per 100,000 Population
600

500

400

300

200

100
1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

Cost-benefit analysis can generate policy recommendations that improve public safety while
lowering taxpayer costs. For example, in 2009, the Washington State Institute for Public Policy
(“WSIPP”) evaluated the effect of a 2003 law that increased “earned early release time” for
offenders who exhibited good behavior in prison. WSIPP’s cost-benefit analysis demonstrated
that by allowing offenders to earn ‘credit’ for earlier release, the new law (1) shortened the length
of prison stays by 63 days on average, which reduced prison costs; (2) decreased recidivism rates
by 3.5 percent; and (3) and increased long-term earnings for released prisoners. Overall, the
program generated a net social benefit of $1.88 per dollar of cost.10
In addition to evaluating the effectiveness of existing programs, cost-benefit analysis can be used
to evaluate the likely returns-on-investment for programs under consideration. Cost-benefit
analysis has been used, for instance, to evaluate a range of potential alternatives to building
more prisons. By combining population forecast data with the results of studies on the success
of various interventions, analysts can identify which program portfolios hold the most promise
for improving safety and lowering costs. In one such analysis, WSIPP weighed the costs and

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Adult Prison and Jail Population
1,522,834

1,600,000
1,316,333

1,400,000

1,200,000

1,000,000
743,382

800,000
777,852

600,000
613,534

400,000

319,598

403,019

200,000
182,288

0
1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

– Prison Population –
– Jail Population –

benefits of the following interventions: vocational training programs for adult inmates, family
therapy for youth offenders, nurse-family partnerships for low-income mothers, and numerous
others. Results showed that specific combinations of these interventions could reduce the state’s
incarceration rate and generate net benefits. As an alternative to constructing more prisons, these
interventions would save taxpayers about $2 billion, including over $1 billion in avoided prison
costs and other criminal justice system costs.11 Using a similar technique, WSIPP analyzed a
sentencing proposal that would reduce prison stays for certain low-risk offenders, and found a net
taxpayer savings of $5.5 million, as well as a 96% probability of reduced net victimizations.12
Another example comes from North Carolina, where cost-benefit analysis was applied to a state
proposal that would raise the age at which young offenders could still be sentenced as juveniles.13
The North Carolina Youth Accountability Planning Task Force worked on the project with the
Vera Institute for Justice, an independent nonprofit organization dedicated to reforming criminal
justice practices and institutions. They assessed the efficacy and cost-effectiveness of to transfering
16- and 17-year-old misdemeanants and low-level nonviolent felons to the juvenile system.
Analysts determined that the plan’s total cost to taxpayers would be $70.9 million per year, which
included the costs of law enforcement, court administration, and other expenses. On the other

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hand, the total benefits to taxpayers and to the juveniles affected by the program would be $123.1
million per year, consisting of cost-savings to the adult system, reduced costs of victimization, and
the long-term benefits to society arising from having fewer youths with adult criminal records
(such records markedly decrease employability and long-term earnings potential). Subtracting
the costs from benefits, Vera and its partners concluded that the program would generate a net
benefit of $52.3 million per year.14

Evidence-Based Practices in States
In the past decade, a number of states have enacted policies requiring the use of evidence-based
decisionmaking in various fields, from criminal justice, to public health and the provision of
social services.15 These practices fall along a spectrum of evidence-based tools. Along this
spectrum, cost-benefit analysis based on scientifically grounded empirical research is the high
watermark. However, given the challenges in fully estimating and quantifying policy impacts,
some researchers have relied on less intensive methodologies. Cost-effectiveness analysis, for
instance, does not involve the monetization of benefits, but instead calculates how many units
of a benefit are generated for each dollar spent. This analysis can be instructive, although unlike
cost-benefit analysis, it does not facilitate comparisons between programs that generate different
types of benefits, such as between a drug court that will reduce adult incarceration rates, and a jobtraining program that raise long-term employment prospects. Even further down on the spectrum
is a more basic cost analysis known as fiscal forecasting, which assesses the costs of a program but
does not include an analogous benefits analysis.
State legislators and policymakers have begun utilizing a variety of these evidence-based practices.
Many states now require fiscal impact statements, which describe the economic effects proposed
legislation, to be attached to every bill that proposes to alter sentencing or corrections law.16
Other states are considering new ways of integrating evidence-based tools into criminal justice
policymaking. Virginia is undergoing a structural shift toward greater reliance on such tools. The
Virginia Department of Corrections has endorsed the “Transition from Prison to the Community
Model,” which relies on social science research to design and administer re-entry programs.17 The
state’s Department of Criminal Justice Services has also developed a pre-trial risk assessment
instrument that generates release recommendations for inmates.18
Alabama is also embracing evidence-based practices in reforming its criminal justice system. The
state contracted with a private research company to create a simulation program that will identify
optimal sentences by inputting offender characteristics into a rigorous statistical model.19 In a report
describing the new program, the Alabama Sentencing Commission noted the significance of this
approach, stating that “[f]or the first time in our state’s history, reliance on anecdotal experience
was abandoned for evidence substantiated by data to underscore the impact[s] of sentencing.”20
And just recently, the state’s Chief Justice endorsed the incorporation of evidence-based research
into sentencing procedures, calling for the expansion of drug courts and community corrections
programs and organizing a judicial conference to train judges on cost-effective sentencing for
nonviolent offenders.21
New York’s sentencing commission is also on board.22 In 2009, the Commission published a report
highlighting the need for correctional policies to be rooted in evidence-based research, finding it
“essential that New York’s policymakers harness this growing body of knowledge of what works in
corrections and infuse our institutional and community programming with scientifically validated,
evidence-based practices.”23 Notably, the Commission endorsed the use of risk/needs assessments
to better tailor in-prison programs for inmates, and to more accurately align parole and probation
supervision with inmates’ risk levels.24 The commission also engaged in a fiscal analysis of shock
incarceration—a shorter-term correctional bootcamp for first-time youth offenders—concluding
that the programs were both financially and practically effective.25
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Calculating Impacts
Applying Cost-Benefit
Analysis to Criminal Justice
Cost-benefit analysis involves measuring all the benefits and costs of a particular criminal justice
policy, and comparing the results across alternative options. For instance, conducting a costbenefit analysis of a drug court program would catalogue all of the costs and benefits of sending
an eligible offender to a drug court program, rather than through the traditional criminal justice
channels.
Every cost-benefit analysis follows the same general roadmap: (1) Clearly identifying and
specifying the elements of the program or policy in issue; (2) Gathering the best information
available about the program’s potential impacts; (3) Calculating all compliance and implementation
costs; (4) Calculating all benefits; (5) Tallying costs and benefits; (6) Analyzing feasible program
alternatives. The example of a drug court is illustrative. Applying cost-benefit analysis to a drug
court program would proceed by:
1.	 Clearly identifying and specifying the program’s elements. Key components of a
drug court program would include: its criteria for eligibility; the process by which
offenders are diverted into the program; where and for how long drug treatments
take place; how participants are monitored and sanctioned for noncompliance; and
how the court interacts with other existing programs.
2.	 Gathering the best information available about potential impacts. Necessary
data would include estimates of the likely number of program enrolless; rates of
recidivism amongst program participants, compared to offenders who are sentenced
to traditional incarceration; and the costs of implementing various aspects of the
program.
Some of this information can be obtained from state budget offices, corrections
departments, and other criminal justice agencies. Existing social science literature
and evidence-based studies should also be reviewed and mined for relevant data.
Unfortunately, however, much of the needed information may be siloed or dispersed
amongst various state agencies. Gathering comprehensive information about the
costs of a drug treatment regimen, for example, require collecting data from the state
budget office, corrections department, health department, and/or social services
bureau.
Some efforts are being made to facilitate intra- and interstate information sharing.
For example, Vera recently established a Cost-Benefit Analysis Unit dedicated to
promoting cost-benefit analysis in state correctional and sentencing policymaking,
and has developed a “Knowledge Bank” to serve as a clearinghouse for relevant
studies.26
3.	 Calculating the costs. Various types of costs need to be included in a cost-benefit
analysis, including capital costs (e.g., the one-time cost of constructing the physical
drug court) and operational costs (e.g., staff salaries, maintenance, and other
overhead expenses). In calculating expenses, marginal costs—which would refer
here to the additional cost of sentencing an offender to a drug court rather than a
traditional prison—should be favored over absolute costs. 27 One study conducted
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in Washington found that drug courts cost about $2,000 more per participant than
ordinary court processing; this figure clearly conveys more information about the
cost-efficacy of a drug court than would the raw total of costs.28
In addition to these tangible costs, a proper cost assessment will include an evaluation
of the program’s less tangible, yet still potentially significant, countervailing risks.
Countervailing risks are in the nature of negative side-effects; they are the unintended
consequences of a policy or program. In the case of drug courts, there is a risk that a
participant will commit a crime that would have been preempted had the person been
in prison. To the extent possible, this risk should be quantified and incorporated as
a cost of the program. At the same time however, traditional incarceration poses
its own set of risks that must be factored into the analysis. For instance, traditional
incarceration may not adequately address an offender’s underlying drug addiction,
thus raising the risk that she will return to criminal behavior upon release. Or, time
behind bars may increase a prisoner’s opportunity to develop more sophisticated
criminal knowledge and criminal network,29 as well as greater propensity for violent
behavior.30 Risk tradeoff analysis weighs these risks to determine whether those
associated with drug court programs are offset by those associated with existing
policies, and assigns an appropriate cost to each option.31
4.	 Calculating the benefits. In tabulating the benefits of a drug court program—or any
crime prevention program—the main category of benefits will be “negative costs,” or
cost-savings generated by the program. As with costs, both direct and ancillary (or
unintended) benefits must be included. A full accounting of the short and long-term
benefits of a drug court program would include:
i.	 Cost-savings to the criminal justice system. Sending offenders to
drug courts avoids the direct costs associated with traditional
incarceration, such as feeding, clothing and housing an inmate. In
addition, drug courts have been shown to reduce recidivism rates,32
thereby saving taxpayers the expenses associated with recidivism.
(These expenses include the administrative and personnel costs of
criminal investigations, prosecution and incarceration, and parole
and probation.)
ii.	 Cost-savings to victims. Another benefit of lower recidivism is the
avoidance of costs to victims. Victimization costs vary by crime,
but generally consist of tangible expenses paid by victims (such
as medical costs, lost wages due to missed work, and stolen or
damaged property) and intangible costs (such as lost quality of
life, fear, and mental suffering). Where low-income victims would
have to rely on public funding for emergency medical care or other
services, reductions in recidivism may also generate significant
cost-savings in social service outlays.
iii.	 Cost-savings to offenders’ families and communities.
Since
participants in drug court programs are often able to live at home
and work during their sentences, these programs avoid some of
the costs shouldered by offenders’ children and families during
periods of incarceration. Examples of such costs include foregone
financial support and the psycho-social effects of an absent spouse
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or parent.33 Moreover, in the long-term, drug court participants are
likely to have greater opportunities for employment and lifetime
earnings.
5.	

Tabulating costs and benefits. Subtracting the total costs from the total benefits
reveals whether a particular program will generate a net social benefit and should
therefore be adopted.34 The results of a cost-benefit analysis can be presented in
different forms. The most common metric is net benefits, which are total benefits
minus total costs.

	

A cost-benefit analysis of a proposed drug court in Washington State concluded
that in general, drug courts showed promise as cost-beneficial programs. Analysts
further found that drug courts were likely to reduce recidivism in Washington
by an estimated 16-38%, down from the 45% re-conviction rate observed in
felony drug offenders processed by regular courts. In turn, this reduction in
future crime would save state taxpayers $4,900 in criminal justice costs per nonrecidivist. Moreover, drug court participants could yield an average cost-savings
of $1,150 to $3,450 in victimization costs. These benefits more than offset the
additional $2,000 per participant the drug court would cost, and ultimately
translated into a net benefit of $2.45 for each tax dollar spent.

6.	

Analyzing feasible program alternatives. Cost-benefit analysis facilitates a
rational comparison between alternative policy options. In the drug court
scenario, the net benefits of a drug court could be compared against, say, the
net benefits (or costs) of a competing proposal that would improve existing inprison drug treatments. Or, different iterations of a drug court program—with
variations in eligibility requirements or other components —can be compared
against one another. Under the cost-benefit standard, the government policy
with the greatest net benefits would be selected.

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Net Benefits
Applying Cost-Benefit
Analysis to Criminal Justice
Like with any policymaking tool, there are challenges inherent in conducting sound cost-benefit
analysis. Some of these obstacles are universal—for example, gaps in underlying data will affect
any cost-benefit analysis, no matter the policy area. Other challenges are unique to the criminal
justice context, such as extrapolating likely recidivism rates from small sample sizes of offenders.

Fully Accounting for Costs and Benefits
When most people consider the costs and benefits associated with criminal justice programs, what
comes to mind are the most direct costs and benefits. Some of these direct costs are tangible, such
as the administrative and staff costs of implementing a job training or family therapy program.
Others are intangible, such as the costs of recidivism or risks to public safety. On the other side
of the coin, intangible benefits may include increased employment potential and improved reintegration into the community.
In addition to quantifying direct costs and benefits, a proper cost-benefit analysis will examine
a wide range of ancillary effects. Historically, ancillary effects have been overlooked and
underestimated in criminal justice policymaking. A rigorous cost-benefit analysis of a drug court
program, for example, would account for the ancillary costs of the alternative option, traditional
incarceration. These costs would include: destabilized family structures, psychological and
emotional trauma sustained by children of inmates, reduced social capital, negative long-term
effects on released offenders’ income-earning potential, and the uneven distribution of social
costs across economically marginalized and minority communities. Identifying and monetizing
these ancillary--and sometimes unintended--costs and benefits is one of the key challenges of costbenefit analysis.
In 2010, WSIPP contracted with the Pew Center on the States to develop user-friendly software
of its standard cost-benefit model. The software application will cull existing emirical studies and
research findings on a particular policy or program, and analyze that information in concert with
state-specific fiscal or demographic data. The program will thus enable states to tailor previous
cost-benefit anlayses to their own needs, helping them identify corrections and sentencing policy
options that will cut costs while enhancing safety.35
Finally, by design, cost-benefit analysis does not encompass every political or ideological factor
relevant to policymaking. There are a range of moral, philosophical, and other considerations
that fall outside the scope of cost-benefit analysis. These factors have a legitimate place in the
decisionmaking process; they are also well complemented by research-driven, evidence-based
analysis.36

Quality of Research and the Need for More Criminal Justice Research
By definition, cost-benefit analysis is evidence-based. It follows that the quality of any cost-benefit
analysis will rise and fall depending on the quality, relevance, and credibility of the underlying data.
There is a dynamic range of what gets counted as “evidence,” and what ultimately gets counted may
come from various sources, such as peer-reviewed journals, stakeholder consultations, output from
statistical or economic modeling, or expert knowledge. But while the definition of “evidence” may
admit of a broad and eclectic range of inputs, not all forms of evidence share equal relevance or
weight. One important distinction is between “hard” or objective evidence, versus “soft” or
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Example Summary of Cost-Benefit Analysis of Crime Prevention Program:
Early Intervention Family Therapy (EIFT) for Juvenile Property and Drug Offenders
Net Present Value
BENEFITS
Reduction in Rate of Recidivism With EIFT (%)

-31%

Cost-Savings to Taxpayers
Police and Sheriff ’s Offices

$400,000

Superior Courts and Country Prosecutors

$500,000

Juvenile Detention and Rehabilitation

$15.2 million

Juvenile Probation and Parole

$8.9 million

Cost-Savings to Victims
Victim Monetary Costs

$1.8 million

Victim Quality of Life Costs

$300,000

Benefit to Youth Participants
Greater Lifetime Earnings

$29.6 million

Greater Quality of Life*

$34.3 million

Total Benefits

$91 million

COSTS
Cumulative Program Costs
NET BENEFIT (Benefits minus costs)

$8.1 million
$82.9 million

Numbers are for illustrative purposes only. They are rough estimates based on several studies
looking at the effects of family-oriented prevention and intervention programs targeting offenders
ages 11-18.
* Greater Quality of Life results from the improved psycho-social well-being that is associated with having
increased educational and employment opportunities and family stability, as well as freedom from the
stigmas associated with having an adult criminal record.

subjective evidence.37 Hard evidence consists of quantitative data--oftentimes primary data
gathered by researchers from experiments (preferably randomized control trials), as well as
secondary social and epidemiological data collected by government agencies or through survey
questionnaires. Soft evidence, on the other hand, is qualitative data such as testimonials or
anecdotes. Cost-benefit analysis requires hard, quantitative evidence, and rigorous cost-benefit
analysis will insist on quantitative evidence that has been collected using scientifically tested
methodologies.
Significant gaps in the literature must be filled before robust cost-benefit analysis can be conducted
for many criminal justice policies and interventions. Numerous public and private institutions
are already dedicated to improving the body of scientific knowledge upon which criminal justice
decisions can be made, but they need substantial financial support in order to broaden their
findings and confirm the validity of preliminary results.38 The central reason why research gaps
persist is a lack of adequate funding. And since criminal justice research is a public good for which
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there is scant private market or economic incentive, the government must take the lead in subsidizing
research. The amount of public monies currently spent on criminal justice research reveals a severe
mismatch between need and funding levels, especially at the federal level.39 The budget of the
National Institute of Justice, which funds criminal justice research efforts by universities, private
organizations, individuals, and other public agencies, provides an illustrative example. In 2008, the
Congressional appropriation to the National Institute of Justice constituted just .2 percent of the
total appropriation to the Department of Justice.40 By contrast, about 7 percent of the Environmental
Protection Agency’s total annual budget is devoted to research, and the annual research budget of the
National Institutes of Health, an arm of the Department of Health and Human Services, is also about
7 percent of that agency’s total budget.41
Where the federal government has left off, states and foundations have begun to fill in gaps. The
Campbell Collaboration, an international research organization, recently established a Crime and
Justice Group to conduct systematic reviews of studies in order to synthesize the best available
research and subject it to meta-analysis. That said, given constraints on foundations’ resources and
the limited returns on any private investment, government investment in criminal justice research
remains crucial to rationalizing criminal justice policy and enacting fiscally responsible options.

The Politics of Legislating Criminal Justice
American debates over criminal justice policy are inherently politicized. Charges of being “soft on
crime” can have serious political repercussions.42 To avoid this fate, politicians have adopted “get
tough” stances on crime, favoring harsher penalties in the form of three strikes laws, mandatory
minimums, and longer sentences.43 Anecdotal evidence and sensational headlines have driven
this trend, and public support seems to affirm the longstanding conventional wisdom that being
uncompromisingly “tough on crime” gets votes.44 Thus, there are political disincentives to adopt new
approaches, and supporting new evidence-based methods may be perceived to entail some political
risk. Additionally, institutional constraints may act as obstacles to long-term criminal justice reform.
Legislators may be reluctant to take actions when the benefits of those actions will not be felt until
after the next election cycle; this is especially true in situations where those actions may generate
short-term financial or political costs.45 Finally, debates over criminal justice reform have tended to
be one sided, dominated by prosecutors, law enforcement, private prison companies, and corrections
officer unions. By contrast, prisoners and their families, as well as prisoners’ rights groups, tend to
wield less influence, as they are often poor, dispersed, and otherwise disenfranchised.46
Cost-benefit analysis can help correct for this imbalance in participation by shedding light on
the wide range of social consequences associated with criminal justice policy. At the same time,
the methodology should be deployed as a neutral tool for achieving more rational policies—
not a mandate for easing criminal punishment. The purpose of cost-benefit anlaysis is to inform
policymakers and improve the deliberative process:
Considering costs as part of the political calculus before enacting legislation
does not, in other words, dictate that a particular sentencing philosophy be
adopted or that a particular outcome be pursued. Having cost information
does nothing to stop legislators from spending more money on prisons. It
simply expands the range of data at their disposal and allows more than one
side of the issue to be aired.47
Rather than being a political liability, empirically-grounded policymaking rooted in cost-benefit
analysis is politically prudent today, given states’ budget crises. Whereas headlines publicizing crime
once helped drive a shift toward harsher policies and increased penalties, today’s headlines on the
economic crisis ought to motivate some rethinking of how criminal justice policy is made. Costbenefit analysis provides an opportunity to implement a new approach in a way that is both fiscally
responsible and consistent with public safety.
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Percentage of Federal Agency Budgets Dedicated to Research

7% on research
($28.5 billion)

EPA

annual budget

HHS

$7.2 billion

annual budget

$707.7 billion
7% on research
($504 million)

DOJ

.2% on research
($54 million)

annual budget

$27 billion

Figures for FY 2008

	

	

Conclusion
Cost-benefit analysis can dramatically improve criminal justice policymaking, infusing evidencebased and research-driven methodologies into decisionmaking processes that are often politically
or ideologically motivated. As an analytical tool, cost-benefit analysis is well established in other
disciplines, and is relied upon by economists, social scientists, and regulators alike. It allows for
the thorough and objective consideration of how a policy change will impact society, facilitating
comparisons amongst competing alternatives and conclusions about how to maximize fiscal
resources. Despite some challenges, including the need for additional empirical research, the
utilization of cost-benefit analysis to evaluate criminal justice programs is an attainable and
worthwhile goal. Compared to other decisionmaking methods, cost-benefit analysis is neutral
and transparent; it also has unique political salience given the economic climate. Successes already
experienced by states like Washington and North Carolina—including reductions in recidivism
and taxpayer costs—are replicable in jurisdictions around the country.

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Notes
1	

JFA Institute, Unlocking America: Why and How to Reduce America’s Prison Population 		
5-7 (2007).

2	

There is a rich literature explaining the convergence of social and political forces that led to the enactment of
harsher criminal policies in United States during the 1960s through the late 1980s. For a thoughtful summary see
id. (discussing political and media campaigns to “get tough on crime,” the growing use of crack cocaine, the public’s
receptivity to tougher punishments, and so on). See also Rachel E. Barkow, Federalism and the Politics of Sentencing,
105 Colum. L. Rev. 1276, 1278-1285(2005) (describing the role that voters’ fears, interest group pressures, and a
lack of institutional checks play in alloying discourse about sentencing policy at the state and federal levels).

	

An equally vast literature evaluates the related yet analytically distinct question of why crime and imprisonment
rates rose during that period—the range of sociological and economic factors that gave rise to the “‘perfect storm’
that drove the imprisonment binge.” Id. at 6. See Scott Christianson, With Liberty for Some: 500 Years of
Imprisonment in America 275-313 (1998); Elliott Currie, Confronting Crime: An American Challenge
4-20 (1985); The Crime Drop in America (Alfred Blumstein and Joel Wallman eds., 2005).

3	

President Reagan’s Executive Order required federal executive agencies to use cost-benefit analysis in developing
all “major” regulations, including those issued by the Environmental Protection Agency and the Departments of
Health and Human Services, Transportation and Interior. Exec. Order No. 12,291, 46 Fed. Reg. 13,193 (Feb. 17,
1981). All subsequent presidential administrations have reaffirmed this mandate. See Exec. Order No. 12,866,
58 Fed. Reg. 51,735 (Oct. 4, 1993). See also White House Office of Management and Budget, Circular A-4,
Regulatory Analysis: Memorandum to the Heads of Executive Agencies and Establishments (Sep. 9, 2003). In January
2011 President Obama issued another executive order underscoring the value of cost-benefit analysis and further
entrenching its role in the regulatory process. Exec. Order No. 13,563, 76 Fed. Reg. 3,821 ( Jan. 21, 2011). See also
Richard L. Revesz and Michael A. Livermore, Retaking Rationality: How Cost-Benefit Analysis
Can Better Protect the Environment and Our Health 11 (2008) (noting that cost-benefit analysis
“has enormous currency in the federal policymaking apparatus,” is “statutorily required” for many important
environmental and social programs, and that despite its challenges the technique “is here to stay.”).

4	

See Office of Information and Regulatory Affairs, 2011 Report to Congress on the Benefits and
Costs of Federal Regulations and Unfunded Mandates on State, Local, and Tribal Entities ( June
2011).

5

	 See Washington State Institute for Public Policy, Return on Investment: Evidence-Based Options to Improve Statewide
Outcomes, ( July 2011) (see figures provided in Exhibit 1 and Technical Appendices), available at www.wsipp.
wa.gov/pub.asp?docid=11-07-1201; Steve Aos, “Presentation of the Benefit-Cost Tool for States: Examining
Policy Options in Sentencing and Corrections,” Testimony before the Washington State Human Services and
Corrections Committee, ( Jan. 21, 2011), available at http://www.wsipp.wa.gov/video_tvw21JAN2011.asp.

6	

See, e.g., Michael W. Finigan et al., Impact of a Mature Drug Court Over 10 Years of Operation:
Recidivism and Costs (NPC Research, Apr. 2007), available at http://www.ncjrs.gov/pdffiles1/nij/
grants/219224.pdf.

7	

See, e.g., M. Susan Ridgely et al., Justice, Treatment, and Cost: An Evaluation of the Fiscal Impact
of Allegheny County Mental Health Court (RAND Corporation Technical Report, 2007), available at
http://www.rand.org/content/dam/rand/pubs/technical_reports/2007/RAND_TR439.pdf.

8	

See, e.g., Stuart S. Yeh, Cost-Benefit Analysis of Reducing Crime Through Electronic Monitoring of Parolees and
Probationers, 38 J. Crim. Justice 1090 (2010).

9	

Sheldon X. Zhang et al., The Cost Benefits of Providing Community-Based Correctional Services: An Evaluation of a
Statewide Parole Program in California, 34 J. Crim. Justice 341 (2006).

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10

	 Elizabeth Drake et al., Increased Earned Release From Prison: Impacts of a 2003 Law on Recidivism and Crime
Costs 1 (Washington State Institute for Public Policy, Apr. 2009), available at http://www.wsipp.wa.gov/
rptfiles/09-04-1201.pdf. In addition to lowering recidivism, the program also resulted in a marginal increase in
property crimes. Id.

11	

Steve Aos et al., Evidence-Based Public Policy Options to Reduce Future Prison Construction, Criminal Justice Costs, and
Crime Rates 14 (Washington State Institute for Public Policy, Oct. 2006), available at http://www.wsipp.wa.gov/
rptfiles/06-10-1201.pdf. Expressed in another way, implementing the alternatives to building more prisons would
generate between $2.59 and $2.75 of taxpayer benefits per dollar of cost. Id.

12	

Steve Aos and Elizabeth Drake, WSIPP’s Benefit-Cost Tool for States: Examining Policy Options in Sentencing and
Corrections 6-8 (Washington State Institute for Public Policy, Aug. 2010), available at http://www.wsipp.wa.gov/
rptfiles/10-08-1201.pdf.

13	

Christian Henrichson and Valerie Levshin, Cost-Benefit Analysis of Raising the Age of Juvenile
Jurisdiction in North Carolina (Vera Institute of Justice, Jan. 2010), available at http://www.vera.org/
download?file=3185/CBA-of-Raising-Age-Juvenile-Jurisdiction-NC-final.pdf.

14	

Id. at 17.

15	

See generally Revesz and Livermore, supra note 3; Jason A. Schwartz, 52 Experiments With Regulatory
Review: The Political and Economic Inputs Into State Rulemaking (Institute for Policy Integrity, Nov.
2010), available at http://policyintegrity.org/publications/detail/52-experiments-with-regulatory-review.

16	

Virginia, North Carolina, New Mexico, Texas, and Florida are among the states that require fiscal notes. See
also Daniel F. Wilhelm and Nicholas R. Turner, Is the Budget Crisis Changing the Way We Look at Sentencing and
Incarceration? 10-11 (Vera Institute of Justice, June 2002), available at http://www.vera.org/download?file=269/
IIB%2BBudget%2Bcrisis.pdf.

17	

Virginia Department of Corrections, Virginia Adult Re-Entry Initiative: The Four-Year Strategic Plan, July 2010—
June 2014 3-18 (2010), available at http://www.vadoc.virginia.gov/documents/reentryInitiativeExecSummary.
pdf.

18	

Virginia Department of Criminal Justice Services, 2007 Blueprints for Change: Criminal Justice
Policy Issues in Virginia 4 (May 2007), available at http://www.dcjs.virginia.gov/blueprints/EBP.pdf.

19	

John Speir et al., Alabama Sentencing Commission: Data Analysis and Simulation Enhancement
5-6 (Alabama Sentencing Commission, Jan. 2008) available at https://www.ncjrs.gov/pdffiles1/nij/
grants/225390.pdf.

20	

Id. at 1.

21	

Alabama State Chief Justice Sue Bell Cobb, State of the Judiciary Address (Mar. 8, 2001), available at http://www.
wsfa.com/Global/story.asp?S=14212980.

22	

The history of sentencing commissions in New York is multifarious, and this particular commission was not
the state’s first. In 1983, Governor Mario Cuomo created New York’s original commission, the New York State
Committee on Sentencing Guidelines; from its beginning it was beset by highly politicized rivalries between
members, and ultimately disbanded after only two years. See Michael Tonry, The Politics and Processes of Sentencing
Commissions, 37 Crime & Delinquency 307, 315 ( July 1991) (describing the commission as a “failure of politics”
and “incompatible political demands”). In March 2007, Governor Eliot Spitzer established a new temporary
commission, known as the Commission on Sentencing Reform, to conduct a comprehensive review of New
York’s sentencing practices. This commission became permanent in October 2010. Press Release, New York State
Unified Court System, Chief Judge Announces Creation of Permanent Sentencing Commission for New York State
(Oct. 13, 2010), available at http://nycourts.gov/press/pr2010_11.shtml; see also Press Release, New York State
Division of Criminal Justice Services, Sentencing Commission Calls for Reform (Oct. 16, 2007) (noting previous
“piecemeal attempts at reforming New York’s sentencing structure…created a situation that [was] a model for the
‘law of seemingly unintended consequences’”) (quoting a preliminary report by the Commission on Sentencing
Reform), available at http://criminaljustice.state.ny.us/pio/press_releases/2007-10-16_pressrelease.html.

23	

New York State Commission on Sentencing Reform, The Future of Sentencing in New York State:
Recommendations for Reform 135 ( Jan. 30, 2009).

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24	

Id. at 139-40.

25	

Id. at 160.

26	

Vera Institute of Criminal Justice, Knowledge Bank for Cost-Benefit Analysis in Criminal Justice, at http://www.
vera.org/project/cba-knowledge-bank.

27

	 Marginal costs exclude fixed costs, or costs that will be incurred by both drug courts and traditional prisons,
such as the salary of a staff employee. While it may be appropriate it some cases to use average costs, rather
than marginal costs, the latter usually offer more conservative cost estimates and should therefore be favored in
conducting a cost-benefit analysis of a criminal justice programs.

28	

Washington State Institute for Public Policy, Can Drug Courts Save Money for Washington State Taxpayers? 2 ( Jan.
1999), available at http://www.wsipp.wa.gov/rptfiles/Drug_Court.pdf [hereinafter WSIPP Drug Courts].

29	

See Martin H. Pritikin, Is Prison Increasing Crime?, 2008 Wis. L. Rev. 1049, 1054-55 (noting that while the “precise
magnitude of the effect is still uncertain,” research findings suggest that low-risk offenders are more likely to
recidivate when they are placed with more experienced offenders, lending support to the idea that prison is a
“‘school’ for criminals”).

30	

See id. (discussing and citing sources for the “brutalization effect of prisons,” a phenomenon resulting from the
prevalence of violence between prison inmates and against inmates by prison guards).

31	

A proper examination of costs will also look beyond start up costs to long-term maintenance or compliance
costs. These future costs must be adjusted for the time value of money to arrive at an estimate of their net present
value. Net present value simply means discounting the value of future costs to reflect the fact that a dollar today is
considered by most people to be “worth more” than a dollar acquired or spent far into the future, say twenty years
from now. When translating costs (or benefits) into present value measures, the effects of inflation must also be
considered; these effects can be accounted for by using a price index and an inflation-adjusted discount rate (often
between three and seven percent annually in the United States.

32	

See, e.g., WSIPP Drug Courts, supra note 27, at 2 (finding that drug courts can lower the rate of future criminal
offending by 16 percent).

33	

Parental imprisonment, for instance, increases dramatically the likelihood that children will develop antisocialdelinquent behavior. One research survey found that the risk for such behavior rose 340 percent, compared to
children with no history of parental imprisonment. Joseph Murray and David P. Farrington, The Effects of Parental
Imprisonment on Children, 37 Crime & Justice 1, 133, 152 (based on four previous studies).

34	

It is worth noting that some costs or benefits may be very difficult to quantify. In this scenario, the qualitative
descriptions (units) of these costs and benefits should be disclosed and considered alongside the monetized
analysis. Failing to acknowledge costs or benefits simply because they are unquantifiable would distort the costbenefit analysis. See Exec. Order No. 12,866, supra note 3 (noting that properly understood, costs and benefits
“include both quantifiable measures (to the fullest extent that these can be usefully estimated) and qualitative
measures…that are difficult to quantify, but nevertheless essential to consider”); Ctr. for Biological Diversity v.
Nat’l Highway Transp. Safety Admin, 508 F.3d 508, 531-35 (9th Cir. 2007) (holding that notwithstanding of the
difficulty of monetizing the benefits of reductions in greenhouse gas emissions, the agency is obligated to analyze
those benefits in either quantitative or qualitative form).

35	

Aos and Drake, supra note 11, at 1.

36	

Examples of complementary moral considerations include the retributive goals of punishment and burdens of
proof. While moral goods could, in theory, be monetized and incorporated as values in conducting cost-benefit
calculations, for the most part they are treated as distinct and policymakers consider them alongside the results
of a cost-benefit analysis. For an example of an attempt to analyze the moral benefits of criminal justice in

utilitarian terms, see Paul H. Robinson and John M. Darley, Intuitions of Justice: Implications for Criminal
Law and Justice Policy, 81 S. Cal. L. Rev. 1 (Nov. 2007) (suggesting that setting sentences in accordance
with people’s sense of retribution is necessary in order to maintain the overall legitimacy of the criminal
justice system).
37	

See Greg Marston and Rob Watts, Tampering With the Evidence: A Critical Appraisal of Evidence-Based
Policy-Making, 3 The Drawing Board: An Australian Review of Public Affairs 3, at 144,

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151 (2003) (“[Q]uantitative secondary social and epidemiological data collected by government
agencies and…primary quantitative data collected by researchers from their experiments, clinical
trials, and interview or questionnaire-based social surveys are typically valued highly as ‘objective’ or
‘hard’ data. On the other hand, qualitative data such as ethnographic accounts and autobiographical
materials are more frequently devalued as ‘subjective’ or ‘soft.’”). See also Lawrence W. Sherman
et al., Preventing Crime: What Works, What Doesn’t, What’s Promising (National
Institute of Justice 1997) (utilizing the Maryland Scientific Methods Scale to assess the validity
and methodological quality of studies on criminal justice interventions, and favoring those with
experimental and quasi-experimental designs).
38	

See Lawrence W. Sherman, Evidence–Based Crime Prevention 10 (2002) (noting that given
the dearth of scientifically rigorous studies, a “clear trade-off ” exists “between the level of certainty
in the answers that can be given on program effectiveness and the level of useful information that can
be gleaned from available science”). See also id. at 413; Tbl. 10.4 (listing particular crime prevention
strategies whose effectiveness remains undetermined).

39	

Charles F. Wellford et al., Strengthening the National Institute of Justice 27-43; 22325 (2010).

40	

Moreover, only a portion of the NIJ’s budget may be allocated to discretionary research awards;
most of its budget is restricted, earmarked either for specific research grants or a host of nonresearch,
including administrative programming. Id. at 40-43 See also id. at 215-23 (calling for the NIJ to be
given greater budgetary autonomy and institutional independence from the rest of DOJ, to allow NIJ to
strengthen its identity as a research agency and advance needed research).

41	

Id. at 41.

42	

See Sara Sun Beale, What’s Law Got to Do with It? The Political, Social, Psychologial and Other Non-Legal Factors
Influencing the Development of (Federal) Criminal Law, 1 Buff. Crim. L. Rev. 23, 42-44 (1997); David C. Anderson,
Crime and the Politics of Hysteria: How the Willie Horton Story Changed American Justice
(1995).

43	

Id. See also Eric Lotke et al., Three Strikes and You’re Out: An Examination of the Impact of Strikes Laws 10 Years
After Their Enactment ( Justice Policy Institute, Sep. 2004); id. at 2 (noting that in the mid-1990s, at least 23 states
and the federal government enacted three strikes laws); Marc Mauer, Why are Tough on Crime Policies So Popular?
11 Stan. L. & Pol’y Rev. 9, 11 (1999).

44	

See generally Anderson, supra note 39; Julian V. Roberts, Public Opinion, Crime, and Criminal Justice, 16 Crime &
Justice 99, 119 (1992).

45	

See Sarah A. Binder, Can Congress Legislate for the Future? (Brookings Research Brief No. 3, Dec. 2006), available at
http://www.brookings.edu/papers/2006/1215governance_binder.aspx.

46	

See also Erika Wood, Restoring the Right to Vote (Brennan Center for Justice, 2009) (documenting and arguing
against felony disenfranchisement laws in the United States).

47	

Barkow, Federalism and the Politics of Sentencing, supra note 2 at 1299.

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