Private vs. public prisons? A dynamic analysis of the long-term tradeoffs between cost-efficiency and recidivism in the US prison system

Compared with the rest of the world, the US prison system is characterized by high incarceration rates, high recidivism, and substantial incarceration costs. The US has increasingly turned to private prisons, resulting in a debate concerning the efficacy of these private prisons. While the private system may produce cost savings it may have also have negative consequences including increased recidivism. Although numerous studies have investigated the cost savings associated with private prisons and their effect on recidivism, to our knowledge no work has evaluated the joint impact. In this paper we evaluate these impacts jointly within a dynamic system model, utilizing cost, incarceration and recidivism estimates from the literature. Overall, considering the tradeoff between cost efficiency and recidivism rates, we find that public prisons are less costly in the long term than private prisons. Considering a 25-year time horizon, we find that total inflation-adjusted costs are approximately 1.5% higher for private prisons than public prisons. Considering a 40-year time horizon, we find that private prisons are 3% more costly than public prisons. Thus, results suggest that estimated short-term cost efficiency provided by private prisons may not be worth the long-term consequences of potential increases in recidivism.