The Economic Case for Rewards Over Imprisonment

There seems to be a growing social consensus that the United States imprisons far too many people for far too long. But reform efforts have slowed in the face of a challenging question: How can we reduce reliance on prisons while still discouraging crime, particularly violent crime? Through the 1970s, social scientists believed the answer was an array of what I will call preventive benefits: drug and mental health treatment, housing, and even unconditional cash payments. But early evaluations of these programs failed to find much evidence that they were successful, confirming a then-developing economic theory that predicted the programs would fail. This Article calls for a return to prevention. It first surveys evidence showing that a large fraction of prison spending has no incremental effect on crime reduction. And it offers the first detailed summary of the modern evidence on prevention. Preventive benefits have now been proven effective in a variety of settings. Along the way, I argue that a famous federal study of cash benefits was fundamentally misinterpreted as failure by its own authors. Next, I lay out the theoretical economic case for preventive benefits. Standard theory rejects benefits because they are said to cost too much and to potentially encourage some individuals to engage in risky behavior in order to be paid to stop. I suggest both these arguments rely on evidentiary claims that have now been found to be largely false. In addition, I collect and synthesize a series of theoretical reasons why benefits would outperform imprisonment. Among others, benefits enrich crime-stricken communities instead of further impoverishing them, as prison does. This simple fact has several important theoretical dimensions. I also show the ways in which the potential to deliver rewards ex ante, or before a crime has been committed, help to overcome a basic failing of prison: they do not require that humans be highly attentive to future consequences