NCJ Number
204786
Date Published
March 2003
Length
24 pages
Annotation
This report presents the methodology and findings of an interstate econometric test of the relative efficiency of privately-operated prisons compared with government-operated prisons, with a focus on the implications of the findings for New Mexico.
Abstract
The econometric model used in this study consisted of a cross-section comparison of 46 States' corrections monetary expenditures per inmate as a function of the portion of the inmates housed privately. To account for differences among States, the econometric model addressed interstate differences in labor market conditions (measured by right-to-work laws), the pay rate for prison guards (measured by entry-level pay for State police as an indicator), and the amount of crowding (measured by use of bed space). Compared with government-operated prisons, this study found significant per-inmate savings for privately operated prisons. With all other factors being equal, New Mexico, which houses 45 percent of its inmates in privately-operated facilities, spent approximately $9,660 less per inmate in 2001 than States with government-operated prisons. Given New Mexico's prison population of 5,300, this amounts to an annual savings of $51 million. A 45-percent rate of prison privatization can be expected to reduce the typical corrections budget by approximately one-third. In addition to study methodology and findings, this report also contains a short history of the privatization movement in corrections and the reasons for it. 2 tables, a 24-item bibliography, and appended supplementary information on the econometric model