Econ Project

Economics of Private Prisons

By Candace C. and Skyler Y.

The Article: The Economics of Private Prisons

Two Sentence Summary: Incarceration rates were rising, so the government turned to private companies to run private prisons. The companies claim that private prisons are better in quality and cost, but in reality it's not clear if they truly are greater and better.

What are Private Prisons?

Prisons run by private companies rather than the government

• As the government continues to support the use of private prisons, the companies earn profit for themselves
• They claim to have better quality, more cost effectiveness, and reduce prison overpopulation
• They boast about their advantages compared to public counterparts, therefore allowing them to be supported by the government

The truth about private prisons

Supply & Demand

How high were the rates?

• Incarceration rates tripled in 1980, public prisons running out of space to hold criminals (supply)
• due to changes in the law & voters wanted it (demand)

Why Private Prisons Were InstalledThere were more criminals and laws were becoming stricter, which made crime and incarceration rates go up

• voters wanted less crime and more prison space for criminals

Public & Private Goods

• Prisons in general are rivalrous and excludable, and are not public goods
• Rivalrous: when a cell is taken, that is one less cell for any other prisoners
• Excludable: only so many prisoners can be stored in a prison at a time
• However, Public Safety, or the departments that capture said criminals/prisoners, are public goods, as they are not excludable or rivalrous

Externalities

• Positive Externality: Gets rid of criminals, more law abiding citizens are around, more peaceful society

• Negative Externality: Private prisons cut costs in certain areas like lowering salaries or provide less for employees, making it more dangerous for them

Game Time!!

Make a Man

Instructions

• We will be asking questions based on what you've learned
• The class will be split into two halves, and therefore make your respective teams
• one person from each half will go to the front
• From here, each representative will choose to either:
• 1. add a body part (no consiquences if you answer incorrectly)
• 2. add a body part AND block the other team from gaining a part for the next round (If you choose this options and say the WRONG answer, you LOSE a body part)
• After choosing, each person will go up to a computer and there will be a stopwatch on the computer. The goal here is to stop it at exactly 2 seconds. Whoever is closest gets to answer first
• Whoever gains a whole body first wins and gets their prize!!

Private prisons are run by private companies.

False

True

Private Prisons were created to prevent prisons from overcrowding

False

True

How do private prisons create positive externalities?

A.) Made supply go up

B.) Makes incarceration rate go down = ppl sad

C.) Makes crime rate go down = ppl happy

D.) It doesn't

Private Prisons are excludable and unrivalrous

False

True

Why were private prisons in need?

B.) There was overcrowding in normal prisons

A.) There were too little prisoners

D.) They're a replacement for schools

C.) Laws become too lax

Prisons running out of space: supply or Demand?

Demand

Supply