The Economic Burden of Incarceration in the U.S.

Working Paper #CI072016
Michael McLaughlin, MACC, MBA, Washington University in St. Louis
Carrie Pettus-Davis, MSW, PhD, Washington University in St. Louis
Derek Brown, MA, PhD, Washington University in St. Louis
Chris Veeh, MSW, PhD, Washington University in St. Louis
Tanya Renn, MSW, MPH, PhD, Washington University in St. Louis
July 2016

Campus Box 1196 One Brookings Drive St. Louis, MO 63130-4899



brown-concordanceinstitute@email.wustl.edu

Abstract
This study estimates the annual economic burden of incarceration in the United
States. While prior research has estimated the cost of crime, no study has calculated the
cost of incarceration. The $80 billion spent annually on corrections is frequently cited as
the cost of incarceration, but this figure considerably underestimates the true cost of
incarceration by ignoring important social costs. These include costs to incarcerated
persons, families, children, and communities. This study draws on a burgeoning area of
scholarship to assign monetary values to twenty-two different costs, which yield an
aggregate burden of one trillion dollars. This approaches 6% of gross domestic product
and dwarfs the amount spent on corrections. For every dollar in corrections costs,
incarceration generates an additional ten dollars in social costs. More than half of the
costs are borne by families, children, and community members who have committed no
crime. Even if one were to exclude the cost of jail, the aggregate burden of incarceration
would still exceed $500 million annually.
Keywords: incarceration, prison, jail, criminal justice

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Background
The scale of incarceration over the past forty years in the United States is
unprecedented. The prison population grew sevenfold as the U.S. became the world
leader in incarceration (Epperson & Pettus-Davis, 2015; Pew Center on the States, 2008).
This phenomenon of hyperincarceration has been criticized for being unnecessary,
counterproductive, and prohibitively expensive (Alexander, 2010). The 2008 financial
crisis underscored these concerns by highlighting the fiscal unsustainability of
hyperincarceration (Henrichson & Delaney, 2012). For many state and local
governments, corrections spending has become an unaffordable burden.
The $80 billion spent annually on corrections has been cited as the cost of
incarceration (DeVuono-Powell, Schweidler, Walters, & Zohrabi, 2015). However, a
growing body of research suggests the true cost of incarceration far exceeds the amount
spent on corrections (Pager, 2007; The Pew Charitable Trusts, 2010; Wakefield &
Wildeman, 2014; Western, 2006). This is because corrections spending ignores costs
borne by incarcerated persons, families, children, and communities. Examples of these
social costs are the foregone wages of incarcerated persons, increased infant mortality,
and increased criminality of children with incarcerated parents. While these costs do not
appear on government budgets, they reduce the aggregate welfare of society and should
be considered when creating public policy.
There is a substantial literature measuring the cost of crime (Anderson, 1999;
Cohen, 2005; Ludwig, 2006). To date, however, no study has estimated the cost of
incarceration. Knowing the cost of incarceration is critical to legislators who weigh the
costs and benefits of incarceration in forming criminal justice policy. The $80 billion in
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corrections spending is misleading because it underestimates the total cost of
incarceration, which includes not just corrections spending but all costs that reduce social
welfare. This study finds the aggregate burden of incarceration to be one trillion dollars,
which approaches 6% of GDP and is eleven times larger than corrections spending.
Each cost estimated in this study represents either the opportunity cost of
resources deployed or people’s willingness-to-pay to avoid an undesirable outcome,
which is consistent with the definition of social costs in the cost-benefit analysis literature
(Boardman, Greenberg, Vining, & Weimer, 2010). The willingness-to-pay concept
acknowledges that social policies have winners and losers; the amount losers would pay
to avoid an undesirable outcome is a social cost (Stiglitz & Rosengard, 2015).
Opportunity costs, which refers to the fact that dollars spent on incarceration cannot be
spent elsewhere, represent a foregone benefit to society and are thus social costs as well.
This study relies on findings from prior research regarding the value of a
person’s life and time. These findings are used to calculate opportunity costs and
people’s willingness-to-pay to avoid incarceration-related harms. Assumptions are
explicitly stated when made, and every effort has been taken to use conservative figures.
In deriving the cost of incarceration this study relies on an incidence-based approach.
This approach identifies the lifetime cost associated with all incidences of incarceration
occurring within a single year. When these costs occur in the future (second-generation
costs) they are discounted to the present value using a discount rate of 3% (Fang, Brown,
Florence, & Mercy, 2012). The Bureau of Labor Statistics inflation calculator was used
to adjust figures to 2014 dollars. Consistent with the incidence-based approach, costs are

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estimated using the number of new admissions to state and federal prisons in 2014 plus
the average jail population for 2014 (Carson, 2015).
Estimating social costs of incarceration is problematic because it is difficult to
disentangle the effects of incarceration from the effects of poverty (Wakefield &
Wildeman, 2014; Western, 2006). If a formerly incarcerated person earns low wages
after being released from prison, this could be due to the stigma of being incarcerated, the
erosion of his or her skills during the period of incarceration, or the lack of a social
network after having been cut off from the outside world. Alternatively, it could be that
the person earns low wages because he or she grew up poor and obtained an inferior
education, which led to him or her becoming incarcerated in the first place. To the extent
possible this study attempts to identify the unique effect of incarceration, but doublecounting of costs is an inevitable drawback to such analyses.
Prior Literature
A substantial literature examines the costs of crime (Anderson, 1999; Cohen,
2005; Ludwig, 2006). These costs include crime-induced production, the opportunity
cost of people’s time, and the value of people’s lives. Crime-induced production refers to
activities that would not be necessary in the absence of crime (e.g., paying a police
force). Time costs assign a value to the minutes people spend locking and unlocking
doors or engaging in other aspects of crime prevention. The value of a human life is
drawn from the cost-benefit analysis literature, and the value of non-fatal injuries is
estimated using jury awards (Boardman et al., 2010; Cohen, 2005).
Crime is by no means the only social problem for which researchers have
attempted to measure the cost. Researchers have estimated the cost of childhood poverty,
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child maltreatment, and disease (Fang et al., 2012; Holzer, Schanzenbach, Duncan, &
Ludwig, 2008). While these studies focus on different phenomena, they share a common
framework. In each case, the goal is to measure the aggregate reduction in social welfare.
This informs policy makers regarding the magnitude of the problem and facilitates
comparisons across social issues. While it may seem callous to say that one social issue
is more costly than another, governments have finite resources and must make tradeoffs
based on relative importance.
Incarceration-related costs have been discussed in a number of studies, but no
study has of yet quantified and aggregated the costs (DeVuono-Powell et al., 2015;
Pager, 2007; The Pew Charitable Trusts, 2010; Wakefield & Wildeman, 2014; Western,
2006). This study fills the knowledge gap by estimating the annual burden of
incarceration to be one trillion dollars. For ease of exposition, the twenty-two costs
estimated in this study are grouped into the following categories: (1) costs of corrections,
(2) costs borne by incarcerated persons, and (3) costs borne by families, children, and
communities.
Costs of Corrections
Corrections spending ($91.1 billion)
Federal and state governments spend $80 billion annually to operate prisons and
jails (DeVuono-Powell et al., 2015; U.S. Department of Justice, 2013). Corrections costs
fund the confinement of convicted prisoners and people awaiting trial (Kearney, Harris,
Jácome, & Parker, 2014). The ideal way to measure the cost of corrections is to track the
costs attributable to all persons incarcerated in a single year throughout their entire spell
of incarceration. Unfortunately such data are not available. To approximate the lifetime
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cost, this study relies on the steady-state methodology used by researchers to estimate the
lifetime cost of disease or child maltreatment when longitudinal data are not available.
Assuming the cost of corrections does not fluctuate considerably from one year to the
next, the steady-state methodology allows the corrections costs incurred during one year
to serve as a proxy for the lifetime cost for persons incarcerated in that year (Fang et al.,
2012). This yields a cost of $80 billion. However, 13.9% of corrections costs do not
appear in government budgets (Henrichson, Rinaldi, Delaney, 2015). These costs include
certain pension obligations, health care benefits for correctional staff, and health care
provided to inmates. The total cost of corrections is thus $91.1 billion.
Costs Borne by Incarcerated Persons (Table 1)
Lost wages of incarcerated persons while incarcerated ($70.5 billion)
The wages incarcerated persons could have earned had they been working reduces
GDP and constitutes lost productivity. After subtracting the value of prison production,
the average incarcerated person incurs $23,286 ($33,066 in 2014 dollars) in lost
productivity per year (Anderson, 1999). Multiplying this productivity loss by the average
jail population (744,600) yields $24.6 billion in lost wages. For prisons, the number of
new admissions (626,644) is multiplied by lost productivity for 2.25 years (the average
time served in prison) and discounted to its present value. This generates a total cost of
$70.5 billion.
Reduced lifetime earnings of formerly incarcerated persons ($230.0 billion)
Incarceration reduces a person’s lifetime earnings between ten and forty percent
(The Pew Charitable Trusts, 2010; Western, 2006). Formerly incarcerated persons earn
lower wages because they face occupational restrictions, encounter discrimination in the
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hiring process, and have weaker social networks and less human capital due to their
incarceration. The reduced wages of formerly incarcerated persons constitutes lost
productivity and is thus a social cost.
Incarceration will have no effect on the earnings of the 5% of new admissions
who will never be released (Pager, 2007). To estimate the productivity loss for the
remaining 95% of new admissions, lifetime earnings (based on full-time work from age
25 to 64) are estimated based on persons’ level of education. The educational status of
new admissions is as follows: 41.3% of are high school dropouts, 46.0% have a high
school diploma/GED, and 12.7% have some form of postsecondary education (Harlow,
2003). The median earnings for high school dropouts, high school graduates, and
individuals with an associate’s degree are $973,000, $1,304,000, and $1,727,000,
respectively (Carnevale, Rose, & Cheah, 2011). Reducing earnings by 25%—the
midpoint of the estimates—generates rounded, per-year costs of $3.3 billion, $4.9 billion,
and $1.8 billion respectively ([1,302,682 * 41.3% * 973,000 * 25%]/40 + [1,302,682 *
46.0% * 1,304,000 * 25%]/40 + [1,302,682 * 12.7% * 1,727,000 * 25%]/40). Treating
each of the per-year costs as a forty-year annuity discounted at 3% produces a total cost
of $230.0 billion.
Cost of nonfatal injuries sustained while incarcerated ($28.0 billion)
The Bureau of Justice Statistics 3rd National Inmate Survey revealed that 3.2% of jail
inmates and 4% of state and federal prison inmates reported being sexually abused during
the year (Kaiser & Stannow, 2013). This implies that 86,288 rapes and/or sexual assaults
occurred in 2014. The cost of a rape has been estimated to be $324,690 in 2014 dollars

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(Cohen, 2005). Thus, the total cost using the steady-state methodology is $28.0 billion.
This is an underestimate because it does not include the cost of physical assaults.
Cost of fatal injuries sustained while incarcerated ($1.7 billion)
Five hundred and thirty-six people committed suicide in state and local jails in
2013 (U.S. Department of Justice, 2015). The suicide rate for incarcerated persons is
16.5 per 100,000 people, which is 1.587 times greater than the risk for persons not
incarcerated (Cohen, 2005). Dividing the number of deaths by the increased risk
suggests the incremental number of suicides attributable to the effects of incarceration is
198. Prior research has measured the cost of a person’s life to be $8.66 million (in 2014
dollars) so the steady-state methodology generates a total cost of $1.7 billion (Anderson,
1999).
Higher mortality rates of formerly incarcerated persons ($62.6 billion)
The mortality rate of formerly incarcerated persons is 3.5 times higher than that of
people who have not been incarcerated (Binswanger, Stern, Deyo, Heagerty, Cheadle,
Elmore, & Koepsell, 2007). For every 100,000 person-years there are 777 deaths among
formerly incarcerated persons compared to 222 for the rest of the population (Binswanger
et al., 2007). Multiplying the incremental mortality by the number of new admissions
(only the 95% of whom will be released at some point) yields a figure of 7,230 premature
deaths (Binswanger et al., 2007; Kaeble, Glaze, Tsoutis, & Minton, 2015; National
Resource Council, 2014). Multiplying this by the value of a person’s life produces a total
cost of $62.6 billion (7,230 * 8,662,000).
Costs Borne by Families, Children, and Communities (Table 2)
Visitation costs ($0.8 billion)
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To visit incarcerated persons, family members must spend time traveling, incur
transportation costs, and suffer emotional harm from being strip-searched (DeVuonoPowell et al., 2015). There are 700,000 families with an incarcerated family member and
the opportunity cost of a person’s time is $18.66 in 2014 dollars (Anderson, 1999; Clear,
2007). Assuming one person from each family spends five hours traveling to and from
visits each month, the cost of this wasted time is $0.8 billion (700,000 * 5 * 12 * 18.66)
using the steady-state methodology.
Moving costs ($0.5 billion)
The incarceration of a family member increases the likelihood that other family
members will change their residence (Clear 2007). A family might move closer to the
prison or jail, or a significant other might move to begin cohabiting with a new person.
The release of the incarcerated person from prison or jail could trigger yet another move.
According to the American Moving & Storage Association, the average cost of an
intrastate move is $1,170 and the average cost of an interstate move is $5,630 (Williams,
2014). One out of nine families changed residences between 2013 and 2014 (U.S.
Census Bureau, 2015). If one out of nine new admissions to prison or jail have a family
member who moves because of incarceration, the number of incarceration-related moves
is 152,867 and the total cost (based on the weighted-average cost of a move) is $0.5
billion (152,867 *

1,170+5,630
2

).

Eviction costs ($0.2 billion)
Incarceration eliminates an incarcerated individual as a source of income for his
or her family, thereby increasing the chance of eviction. Release from incarceration also
increases the chance of eviction because people with felony convictions face barriers with
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private landlords and in some cases are banned from public housing (DeVuono-Powell et
al., 2015) Ten percent of formerly incarcerated persons report family members being
evicted from their home post-incarceration (DeVuono-Powell et al., 2015). The average
cost of an eviction is $1,635 (TransUnion, 2014). Thus, the total incarceration-related
cost is $0.2 billion (1,371,244 * 0.10 * 1,635). This underestimates the true cost because
it only includes costs to landlords and ignores the emotional harm suffered by families.
Interest on criminal justice debt ($5.0 billion)
Incarceration may cause the family of an incarcerated person to go into debt.
Transportation and telephone costs alone put 34% of families in debt (DeVuono-Powell
et al., 2015). The total amount of criminal justice debt owed is $50 billion; at an interest
rate of 10% this yields an annual cost of $5 billion based on the steady-state methodology
(DeVuono-Powell et al., 2015).
Adverse health effects ($10.2 billion)
Sixty-six percent of incarcerated persons and family members report experiencing
detrimental mental health effects such as depression, anxiety, and post-traumatic stress
disorder (DeVuono-Powell et al., 2015). The cost of PTSD, major depression, and PTSD
with major depression are $5,900 to $10,300, $15,460 to $25,760, and $12,430 to
$16,890, respectively (Tanelian, Jaycox, & Invisible Wounds Study Team, 2008). The
high estimates include the loss of life due to suicide (Tanelian et al., 2008). This study
uses the low estimates to avoid double-counting suicides that were accounted for by
nonfatal injuries to incarcerated persons. The average of the low estimates is multiplied
by the incidence rate and the number of new admissions annually yields a total cost of
$10.2 billion (1,263 * 0.66 * 1,371,244).
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Infant mortality ($1.2 billion)
After controlling for other risk factors parental incarceration increases infant
mortality by 40% (Wakefield & Wildeman, 2014). The infant mortality rate in the U.S.
is 5.96 deaths per 1,000 live births, so incarceration results in an additional 2.384 deaths
per 1,000 live births for infants with an incarcerated parent (Center for Disease Control
and Prevention, 2015). The number of live births for incarcerated parents was 56,119 in
210,567

1,350,958 +744,600

2014 ([210,567 +1,350,958 +744,600 * 0.7% + 210,567 +1,350,958 +744,600 * 2.4%)] * 2,500,000).
This was calculated using a weighted average for federal and state prison populations,
with the percentage of jail inmates with infant children assumed to be the same as that of
the state (Glaze & Maruschak, 2010). The incremental mortality implies an additional
2.384

134 children die (56,119 * 1,000). Based on the value of a human life the total cost is $1.2
billion, using the steady-state methodology.
Children’s education level and subsequent wages as an adult ($30.0 billion)
Ten percent of incarcerated persons’ children are unable to finish high school or
attend college because of their parents’ incarceration (DeVuono-Powell et al., 2015).
Since half of incarcerated individuals contributed at least 50% of their families’ income,
their teenage children may forego education and prematurely enter the labor force to
compensate for the lost family income (DeVuono-Powell et al., 2015). This is a social
cost because it leads to underinvestment in the human capital and productivity of young
people.
Assuming that new admissions (only the 42.2% of whom have zero criminal
history, to avoid double-counting) are responsible for a proportionate share of the 2.5

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million children with an incarcerated parent, there were 627,313 children (

1,371,244∗0.422
2,306,125

∗

2,500,000) affected by parental incarceration for the first time in 2014 (U.S. Sentencing
Commission, 2004). If 10% of these children did not complete their education due to
parental incarceration, then 62,731 children did not complete their educational goals.
The difference in lifetime earnings for a high school dropout versus a high school
graduate is $331,000 and the difference for a high school dropout versus a college
graduate is $1,295,000 (Carnevale et al., 2011). The weighted-average of these
reductions in lifetime earnings is $813,000. Multiplying the weighted-average reduction
by the number of children who do not complete their education goals produces a
62,731∗813,000

discounted cost of $30.0 billion (

1.0318

).

Increased criminality of the children of incarcerated parents ($130.6 billion)
Children of incarcerated parents are five times more likely to go to prison
(Simmons, 2000). If parental incarceration increases the criminality of children, then it
creates second generation costs that are manifested in a higher rate of future crime
(Cohen, 2005; Glueck & Glueck, 1950; Hagan & Palloni, 1990; Murray & Farrington,
2005; Sampson & Laub, 1993; West & Farrington, 1977; Wildeman, 2009). Assuming
that new admissions (only the 42.2% who have zero criminal history, to avoid doublecounting) are responsible for a proportionate share of the 2.5 million children with an
incarcerated parent, there were 627,313 children (

1,371,244∗0.422
2,306,125

∗ 2,500,000) affected by

parental incarceration for the first time in 2014. The likelihood that the average person
will commit a crime is 5.1% so the incremental likelihood that children with incarcerated
parents will commit a crime is 20.4% (25.5% – 5.1%). Parental incarceration thus creates

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127,972 future offenders annually (627,313 * 0.204). The number of offenders created is
127,972

9.33% of new admissions (1,371,244). Assuming the amount of crime increases
proportionate to the increase in new admissions, the 9.33% increase in crime generates
9.33% ∗ 2,382,120,000,000

discounted costs of $130.6 billion in 2014 dollars (

1.0318

).

Child welfare costs ($5.3 billion)

Changes in the incarceration rate of females alone accounted for 30% of the
increase in foster care caseloads between 1985 and 2000 (Swann and Sylvester, 2006).
The cost to the child welfare system per victim is $7,728 (Fang et al., 2012). Assuming
30% of the 2.1 million screened-in referrals (those resulting in an investigation by Child
Protective Services) were related to parental incarceration, the total cost is $5.3 billion in
2014 dollars (2,100,000 * 7,728 * 0.30 * 1.09) using the steady-state methodology (U.S.
Department of Health and Human Services, 2015).
Children rendered homeless by parental incarceration ($0.9 billion)
At least 60,000 children (between 2.4% and 2.7% of the 2.5 million children with
an incarcerated parent) become homeless as a result of parental incarceration (Wakefield
& Wildeman, 2014). The average cost of homelessness is $14,480 per homeless person,
so the total cost of child homelessness is $0.9 billion (60,000 * 14,480) using the steadystate methodology (National Alliance to End Homelessness, 2015). This figure is an
underestimate because it does not include the psychological harm becoming homeless
does to children.
Homelessness of formerly incarcerated persons ($2.2 billion)

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Between 25% and 50% of the homeless population is formerly incarcerated
(Knopf-Amelung, 2013). The most recent estimate of the homeless population is
610,042. Using the lower of the two estimates listed above produces an estimated total of
152,511 formerly incarcerated persons among the homeless (Henry, Cortes, & Morris,
2013). The average cost of homelessness to taxpayers is $14,480 annually per homeless
person, so incarceration leads to $2.2 billion in homelessness costs using the steady-state
methodology (National Alliance to End Homelessness, 2015). This underestimates the
true cost because it does not include the emotional harm to the people who are homeless.
Reentry programs ($2.9 billion)
The 2015 Second Chance Act (SCA) and Justice and Mental Health Collaboration
Program (JMHCP) conference was attended by 1,400 federally-funded reentry programs
(National Reentry Resource Center, 2015). The average budget for a public charity is
$2,093,772 so the steady-state methodology places the cost of these reentry programs at
$2.9 billion (National Center for Charitable Statistics, 2015). This is an underestimate
because it does not account for the time spent by volunteers, academics, and government
officials on the movement to end mass incarceration.
Decreased property values ($11.0 billion)
Incarcerated persons are released into concentrated areas after completing their
sentences, which could reduce property values in those neighborhoods (Clear, 2007). If
people prefer not to live near formerly incarcerated persons, this could increase the
number of homes for sale in a neighborhood and decrease housing prices. Incarceration
might also reduce property values because it removes individuals from the community

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and thus makes it difficult for their families to maintain their lawn, contribute to
community efforts, and avoid eviction.
Research suggests people willingly incur costs to avoid living near a formerly
incarcerated person. Housing values decline between 2.3% and 4% when a sex offender
moves into an area, with actual declines of $5,500 and $3,500, respectively (Linden &
Rockoff, 2008; Pope, 2008). While the authors of these studies argued the property value
decreases were a cost of crime, this study assumes the stigma of incarceration is
responsible for the property value decline. Applying the weighted average of these price
declines to the 95% of new admissions who will one day be released, and assuming that
the arrival of each formerly incarcerated person affects the value of two homes (Pope,
2008 suggests homes within a 0.1-mile radius are affected). Thus, the discounted cost is
1,371,244∗0.95∗4,500∗2

11.0 billion (

1.032.25

).

Criminogenic nature of prison ($285.8 billion)
High levels of incarceration may actually increase crime by reinforcing behavior
and survival strategies that are maladaptive outside the prison environment (Aizer &
Doyle, 2015; Kellogg, 2015; Hoge, Buchanan, Kovasznay, & Roskes, 2009; Reiman &
Leighton, 2013). Removing large numbers of people from communities may also weaken
the social controls that bind neighborhoods together (Reiman & Leighton, 2013).
Estimates of the criminogenic effect of prison range from 4% to 23% (Aizer & Doyle,
2015; Bhati & Piquero, 2008; Smith, Goggin, & Gendreau, 2002). Applying the
midpoint of this range (13.5%) to the annual cost of crime and adjusting for the fact that

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5% of incarcerated persons will never be released generates a discounted cost of $285.8
0.95∗0.135∗2,382,100,000,000

billion (

1.032.25

).

Divorce ($17.7 billion)
Incarcerated persons have triple the divorce rate of people who are convicted but
not incarcerated (DeVuono-Powell et al., 2015). Divorce retards economic growth by
eliminating economies of scale and eroding human capital (Potrykus & Fagan, 2012).
The ramifications are substantial; Nobel Prize-winning economist Robert Lucas
described human capital as the primary driver of economic growth (Lucas, 1993). The
amount of growth attributable to human capital has been variously estimated to be 61%,
49%, and 22% (Hall & Jones, 1999; Jorgenson & Fraumeni, 1992; Mankiw, Romer, &
Weil, 1992; Umut, 2015). Divorce reduces human capital by one-fourth (Potrykus &
Fagan, 2012). Because real GDP has grown 3.22% annually since 1948, divorce has
reduced economic growth by at least 0.1771% (0.22 * 0.25 * 0.0322). Thus, the 2014
GDP figure of $17.42 trillion would be $30,850,820,000 higher if not for divorce (The
World Bank, 2015). The amount attributable to incarceration can be ascertained by
noting that 47% of incarcerated persons’ family members obtained a divorce or separated
from a partner as a result of incarceration (DeVuono-Powell et al., 2015). This study
assumes a separation has the same economic effect as a divorce. Multiplying this
proportion by the number of new admissions generates an estimate of 644,485
incarceration-related divorces and separations. The total number of divorces in the U.S.
in 2013 was 1,121,294 (Center for Disease Control and Prevention, 2015). Thus, the

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644,485

incarceration-related component of the cost of divorce is $17.7 billion (1,121,294 *
30,850,000).
Cost of reduced marriage ($9.0 billion)
Incarceration also reduces the likelihood of marriage for formerly incarcerated
persons (Clear, 2007). Foregone marriage generates costs for the same reasons as
divorce (Potrykus & Fagan, 2012). The reduced likelihood of marriage is highest for
black males, who are 50% less likely to become married following a period of
incarceration (Clear, 2007). This study conservatively assumes formerly incarcerated
persons are 25% less likely to become married. Applying this percentage to new
admissions who will be released at some point yields an estimate of 325,670 for the
number of people who will forego a marriage opportunity. Assuming the cost of a
foregone marriage is equivalent to the average cost of a divorce (

30,850,820,000
1,121,294

), the total

cost of foregone marriage opportunities is $9.0 billion.
Discussion
The aggregate burden of incarceration in the U.S. for a single year is $997 million
(Table 3) which is nearly 6% of GDP and eleven times the size of corrections spending
(DeVuono-Powell et al., 2015; Pager, 2007; Western, 2006). Even if one ignores the
costs to incarcerated persons and the costs of corrections, the cost is still $513 million—
an amount borne by families, children, and communities that are innocent of any
wrongdoing. The failure to take these costs into consideration could cause legislators to
overestimate the net benefit of incarceration when they are determining criminal justice
policy. This is because social welfare is maximized when incarceration is supplied at the

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level where the marginal social benefit equals the marginal social cost. Underestimating
the cost of incarceration by ignoring hundreds of millions of dollars in costs could cause
incarceration to be oversupplied, resulting in a level of incarceration beyond that which is
socially optimal.
As a sensitivity check, the cost with jails excluded is presented alongside the cost
of incarceration inclusive of jails (Table 3). This is done to address the potential
objection that being sent to jail doesn’t have the same negative effects as being sent to
prison (e.g., reduced lifetime earnings). Even after excluding the costs attributable to the
jail population, the aggregate burden still exceeds $500 million, nearly half of which is
borne by families, children, and communities. The costs of jail are important, however,
and should not be neglected. More than eleven million people cycle in and out of jails
each year, and a case could be made that conditions in jails are worse than conditions in
prison (Clear, Reisig, & Cole, 2016). Ignoring the costs of jail would lead to the cost of
incarceration being significantly underestimated.
The aggregate burden of incarceration (inclusive of jails) estimated in this study
may underestimate the true cost of incarceration for several reasons. First, it does not
account for the damage incarceration causes to social networks or the emotional harm
inflicted on children and families (National Resource Council, 2014). Second, it does not
include the cost of juvenile incarceration, which may be substantial (Aizer & Doyle,
2015). Third, it does not account for a number of costs that are difficult to measure, such
as the psychological pain children suffer when they become homeless or the deterioration
in physical health experienced by incarcerated persons and their families. Finally, it does
not account for the human potential and innovation lost by incarcerating millions of
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people. In the long run, this could jeopardize the United States’ status as the world’s
economic leader. Future research could estimate the cost of incarceration more
accurately by incorporating these additional costs.
Another limitation is that this study does not consider the benefits of
incarceration. To set the optimal rate of incarceration, a policy maker would need to
know not only the costs of incarceration but also the benefits. Prisons serve a valuable
purpose by providing deterrence and incapacitation effects (Levitt, 2004; Yezer, 2014).
Yet, there is a point where the marginal cost of incarcerating an additional individual
exceeds the marginal benefit. Cost-benefit analysis is the standard framework for
evaluating policy in this manner (Boardman et al., 2010). The first step is understanding
the cost of incarceration, which this study aims to establish. Future research could
provide a richer understanding by identifying the benefits of incarceration and weighing
them against the costs at the margin.
Like all studies that estimate the economic burden of a social problem, this study
is grounded on the research, techniques, and estimates derived by other researchers. To
the extent that previous estimates (e.g., the value of a human life) were measured with
error, the costs computed in this study will be less precise. Future researchers can
improve upon these methods so that more precise calculations can be made. But even
having done so, there is the omnipresent danger of double-counting. Many of the costs of
incarceration may actually be costs of poverty or other social problems. To the extent
that double-counting occurs, the cost of incarceration will be imprecisely estimated.

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Conclusion
Researchers have devoted considerable effort to estimating the cost of crime, but
no study has yet estimated the aggregate burden of incarceration. Recent reports
highlighting the costs to incarcerated persons, families, and communities have made it
possible to estimate the true cost of incarceration, which is found to be one trillion
dollars. This approaches 6% of GDP and is eleven times larger than corrections
spending. This is important because it suggests that the true cost of incarceration has
been grossly underestimated, perhaps resulting in a level of incarceration beyond that
which is socially optimal.

Compliance with Ethical Standards

Disclosure of potential conflicts of interest: The authors declare that they have no
conflict of interest.

Ethical approval: This article does not contain any studies with human participants or
animals performed by any of the authors.

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Table 1
List of Costs Borne by Incarcerated Persons
Cost
Reduction in lifetime earnings of incarcerated persons
Lost wages while incarcerated
Higher mortality rate of formerly incarcerated persons
Nonfatal injuries to incarcerated persons
Fatal injuries to incarcerated persons
Total

$ (Billions)
230.0
70.5
62.6
28.0
1.7
392.6

Note. The sum of the individual costs does not match the total because of rounding.

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Table 2
List of Costs Borne by Families, Children, and Communities
Cost
Criminogenic nature of prison
Increased criminality of children of incarcerated parents
Children's education level and subsequent wages as an adult
Divorce
Decreased property values
Adverse health effects
Reduced marriage
Child welfare
Interest on criminal justice debt
Reentry programs, nonprofits, movement to end mass incarceration
Homelessness of formerly incarcerated persons
Infant mortality
Children rendered homeless by parental incarceration
Visitation costs
Moving costs
Eviction costs
Total

$ (Billions)
285.8
130.6
30.0
17.7
11.0
10.2
9.0
5.3
5.0
2.9
2.2
1.2
0.9
0.8
0.5
0.2
513.2

Note. The sum of the individual costs does not match the total because of rounding.

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Table 3
The Aggregate Burden of Incarceration
Cost
To correctional institutions
To incarcerated persons
To families, children, and communities
Total

$ (Billions)
91.1
392.6
513.2
997.0

$ excluding jail (Billions)
65.9
200.4
234.9
501.2

Note. The sum of the individual costs does not match the total because of rounding.

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