Prison labour

Salient's Emma Hurley asked me for comment on the economics of prison labour. Victoria University contracts with one of the prisons for laundry services, and the prisoners are not there paid very much. She asked me whether that's acceptable and whether it has negative effects on the rest of the economy.

Her story is here. She didn't wind up having room for my comments, but here's what I'd told her.

I’m afraid I don’t have any clear-cut answers for you, only trade-offs.

Working while in prison can be an important part of prisoner rehabilitation. Getting work experience, having to meet set hours, and getting a supervisor’s attestation of the worker’s ability are all really important in helping somebody make the transition into work from criminal activity – and that’s not an easy ask, where a lot of employers are really scared of hiring a former criminal.

The problem then is whether the prisoner’s labour is really worth the minimum wage. A lot of criminals were not in paid employment prior to incarceration. I do not have New Zealand data to hand, but I know that when I’d looked at some Australian statistics a few years ago, at least in one state, somewhere around 90% of those in prison were not in paid employment in the month before they were tried. Those coming from a criminal background tend not to have characteristics that employers find desirable. You would have a very difficult time in getting anyone to hire prisoners at the minimum wage, and you would then lose out all of the rehabilitation benefits that come from being in employment.

Finally, you never ever want prisoner labour to be a profit centre for prisons. There’s a really bad history with that kind of thing in some parts of the US: under the convict lease system in American post-civil-war reconstruction, prisons would lease out convict labour and pocket the gains; they then had very strong incentive to have a lot of people in prison. If a low wage paid to prisoners is a way of providing profits to either public or privately run prisons, rather than a way of ensuring the broadest range of prisoners are able to benefit from employment, then that can be pretty undesirable.

So we’re then firmly into trade-off territory. The higher the wage that prisoners make, the fewer of them that will gain benefits from work experience. Worse, the ones most in need of it will be the first ones shut-out. If the wage is very low and that results in prisons being able to earn strong profits from leasing out prison labour, that provides pretty bad incentives for the government: keeping people in jail should not be a profit-centre for the government. But if the wage is low because prison labour is not particularly productive and because the proceeds from the contracts run by the prisons are used for job training and skills enhancement for those in prison-based employment, that’s entirely different. I just do not know enough about the prisons’ financial statements to be able to make any calls there.

Where prison labour makes up only a small fraction of the overall labour market, I do not expect it could have any large negative effects elsewhere in the economy. If prison contractors are the most effective way of providing things like laundry services, that could have less to do with labour costs and more to do with that they would already have huge boilers and wash facilities for their own needs that they could also put to contract work – again, I do not know, but it is likely to matter and oughtn’t be ignored. Private laundries would then be a bit smaller than otherwise and people who would have been employed in private laundry services would be employed elsewhere instead.

It’s probably best to think of the problem in two parts. The first part of it is sorting out the best rehabilitation set-up for prisoners, which can involve prison labour. Set the wage rates in prison to make sure that the prisons provide rehabilitation most effectively – and while watching that prisons are not using prison labour as strong profit centre. If that is all set correctly, then we can come to the second part. You can really think of prison labour in that case as being little different from trade with a foreign country with different cost structures. It will affect what work is done in the non-prison-sector in New Zealand, but should not affect the total quantity of work. When Vic can save a bit of money on laundry, they’ll spend it elsewhere, or students will be charged a bit less than otherwise, or the government will have to give a bit less money to Vic. All of those have positive employment consequences elsewhere in the economy that are not as visible as whatever effects obtain on the laundry industry, but are every bit as real. 

Penalties

The economic model of suicide: when the expected future utility stream turns negative and looks to be persistently so, or negative enough for a short period, you set it to zero instead. You can add in lots of stuff about how depression or mental illness can bias the expected future utility stream, or about irrationality in response to short term shocks, but my first-cut thought on hearing of suicide is to wonder what made the expected future utility stream seem sufficiently terrible that setting it to zero was preferable.

In the Aaron Swartz case, which has been ably and thoroughly discussed by people far closer to the case than me, it seems to have been the prospect of prison: a bullying prosecutor was insisting on a prison sentence for a relatively minor transgression, likely to make a point about how the State-Is-The-Boss-Of-You-And-Don't-You-Dare-Think-Otherwise.

I've seen lots of very appropriate wondering about prosecutorial discretion and just what the American justice system is turning into if a guy like Swartz could have been up for a prison sentence.

But what about everybody else - people who weren't as heroic as Swartz and not as worthy of laudatory accounts from around the web? Any justice system will accidentally convict at least a few innocent people. Should prison conditions really be such that gentle people can prefer suicide?

I wonder if we ought not give greater consideration to Peter Moskos's modest proposal for penal reform. I hope that the system is fixed so that cases like Swartz's do not lead to prosecutorial bullying. But even absent that kind of bullying, and it's best-case thinking to think it can be eliminated, peaceful people will continue to be jailed for small mistakes, or for things that ought not be considered crimes in the first place. And we have decent evidence (ungated version) that harsher prison conditions worsen recidivism anyway.

The conditions that Swartz seems to have deemed worse than death are home to about 1.6 million Americans.

Things could be worse though; at least real-world prisons don't have Azkaban's Dementors. Yudkowski nicely makes the case for penal reform of Magical Britain in Harry Potter and the Methods of Rationality - about two thirds of the way through Chapter 62...

Experiment on prisoners!

National's announced what sounds like a decent measure to reduce alcohol-related crime: better rehab treatment in prisons for offenders.

Budget 2012 will contribute to a 25 per cent reduction in reoffending by 2017, and 18,500 fewer victims of crime every year from 2017, Corrections Minister Anne Tolley and Associate Corrections Minister Dr Pita Sharples say.

The moves are part of the Prime Minister’s expectations for a more efficient and results-driven public service.

A boost in alcohol and drug treatment, alongside increased education, skills training and employment programmes for prisoners, including remand prisoners, will lead to safer communities and better value for money for taxpayers.

From 2017, there will also be 600 fewer prisoners in jail than in 2011, and 4,000 fewer community offenders.

“It’s time to get serious about breaking this vicious cycle of prison and reoffending,” Mrs Tolley says.

There have been a few stories out over the last few years about lack of availability of treatment options for offenders who have wanted to seek treatment; increasing availability is likely to help those offenders. But it would likely be wrong to extrapolate from results achieved by those seeking treatment to those that could be achieved among those who would be compelled to seek treatment. So while I'm not convinced that Tolley's projections around reductions in reoffending are right, it still seems a policy worth trying.

Even better, it's a policy possibly worth trying as a randomized control trial. If the total amount of funding available isn't sufficient to give drug and alcohol rehabilitation treatment to everyone they might wish to have it, or to provide employment and reintegration support to all prisoners leaving prison, randomize who gets to participate. Here's one potential approach.

Set up three groups for each type of intervention. The first is a control group - no treatment. The second is compelled to participate, but they get a lotto. Those wishing not to have treatment can ask for it, and some of those wishing to opt out will be able to opt out. The third gets a lotto: those wishing to select into treatment can ask for it, and some of those opting for it will get it.

What does this kind of design let you do?

1. What's the value of treatment for those who want to have treatment? Compare outcomes for those who indicated they want treatment but didn't get it with outcomes for those who won the lottery.

2. What's the value of treatment for those compelled to have treatment? Compare outcomes for those who are forced into treatment against their lottery-expressed wishes with those who are allowed to opt-out of compelled treatment.

3. What's the effect of changing the default option? Compare average outcomes between the two lottery treatments.

4. What's the average effect of compulsory treatment? Get the average rate of "wanting to be treated" across groups 2 & 3, the effect of treatment on the "want to be treated" groups in 2&3, the average rate of "not wanting to be treated" across 2 & 3, the effect of treatment on that group, take the weighted average outcomes across both, and compare to the control group. This would be what we'd expect as effect of a blanket "must be treated" rule.

It's great that the government's looking at targeting one of the real sources of alcohol and drug related external cost. It would be even better to set it up so we could learn something!

Alas, the Ministry of Justice and the Corrections Minister would likely have a hard time getting this done under the auspices of any of the universities due to likely quibbling from Human Ethics Review panels. But I'm sure there'd be a few folks around who'd find it interesting enough to do as a side project.

Prison economic illiteracy

There are good arguments against privatizing prisons. Labour's Charles Chauvel doesn't use them here:

Labour's justice spokesman Charles Chauvel said Wiri was expected to cost the taxpayer about $1 billion over 25 years but its "indirect" costs were becoming clear and were "disturbing".

"National seems to have made a decision that, rather than refurbish many regional state-owned institutions, it will simply close them. Prison closures will be a big blow to regional economies. Job losses will be significant."

The proposal made "little economic or social sense".

The National-led Government should invest the $1 billion in improving existing state assets instead of boosting the bottom line of a private company, he said.

 A few of the problems:

• Prison guard jobs are a cost, not a benefit; if we could guard them for free, that would be better.
• Closing old prisons and opening a newer one will mostly mean job transfers, not job losses. 
• Viewing prisons as an economic development initiative is a quick route to bad outcomes; imprisonment becomes a good rather than a bad.

While Shleifer raised some really good points against prison privatization, those are mostly arguments about making really sure to get the incentive contracts right. Private prisons can too easily chisel on margins that reduce costs but brutalize prisoners and increase re-offending. But that doesn't seem to be the case here. 

The private manager of the prison facilities is subject to a re-offending target, according to the Press article:

Serco is expected reduce reoffending by more than 10 per cent and will face financial penalties if it fails to meet the target. 

And, Serco is the company that manages Mt Eden prison, where they found it cheaper to treat prisoners kindly and thereby save on guard costs. 

I have no view on whether total costs are reduced by closing the old prisons and building a new one; I've not looked at the numbers. But Labour's not making a particularly good case against the move.

What a waste

Norwegian experimental economists ran some social trust experiments on a sample of prisoners. In prison.

You'd think the first thing they'd do would be to try the Prisoner's Dilemma, right?

Alas, they run a dictator game and some variants on a trust game.

Is there no poetry left in the world?

HT: Chris Dillow

Oh, they found that prisoners weren't much different from non-prisoners. But what a let-down. I'd have wanted to see two treatments on the Prisoner's Dilemma game. One with neutral framing, the other with the complete "Two prisoners, separated..." framing.

Prison cost minimization

The usual argument against privatizing prisons, at least in the econ literature, is that incomplete contracts combined with profit maximization gives prisons too strong of incentives to cut costs by worsening conditions for prisoners.

And so I was more than a bit surprised to hear this on Radio NZ this morning:

Mt Eden prison operator Serco is accused of bribing inmates with double-size meals and LCD televisions in their cells, so they are less likely to cause trouble.

The Corrections Association, the main prison officer's union, says that in addition to larger meals, Serco serves dessert every night, which is unheard of in the State prison system.

Association president Beven Hanlon says these ''luxuries'' allow Serco, a private operator, to get by with a skeleton crew.

But he says guards are feeling vulnerable and are leaving on a daily basis.

In a statement, Serco says the LCD televisions are small and must be paid for by the inmates.

The company won't directly respond to the other claims, but says the quantities of food served and the number of officers employed are both appropriate.

Yup, you heard that right. The private prisons here are accused of being too cushy: they've found that actually treating inmates well makes it easier to guard them.

Morning Report had the Sensible Sentencing Trust representative bemoaning that the nicer prisons aren't punitive enough - that harsher prisons are needed to teach inmates a lesson. Well, what literature we have on that suggests rather the opposite: harsher prisons correlate with increased likelihood of recidivism.

And so New Zealand's private prisons may be doing well by doing good.

And in prison news...

New Zealand's prisons go smoke-free today. Some inmates are smoking their nicotine patches. I'm not sure that's an improvement.

Inmates have not been able to buy tobacco, matches or lighters since June 1, and cigarettes are now in hot demand.

"Some prisoners have made their normal allowance last more than a week, by smoking half at a time," assistant general manager of prison services Brendan Anstiss said.

"Tobacco has become a more valuable commodity. Those who do have cigarettes are more likely to keep them to themselves."

...

Corrections Minister Judith Collins announced the health and safety-based smoking ban last June, giving a year for prisoners to get used to the idea and try to quit.

The impending ban has already forced a price hike for tobacco on the prison black market, with a packet of cigarettes fetching up to $300, according to sources.

Ok. So no new cigarettes into prison starting 1 June, with no smoking allowed after 1 July. And the price rises to $300 within a month? I wonder if there's any time series data on those prices. You could likely use them to back out a measure of prisoner time preferences. A non-smoking prisoner could get his allocation in on 31 May then has a choice to sell or hold the cigarette on each day up to 30 June, knowing the value goes wonky 1 July after consumption is banned. Every day the price is higher than the prior day. And it reaches $300 by 30 June. That suggests pretty high discount rates by non-smoking cigarette sellers in the black market, or systematic underestimation of how much of the prison's stock was being depleted in each period. It would be cool to run Hotelling's pricing model to back out implied discount rates.

Meanwhile, in Canada, female prison guards in male prisons are being given training in how to avoid having sexual trysts with prisoners. Roissy would likely claim it's mostly due to the alpha nature of many prisoners; I'd worry about the extent to which guards' power was being exercised over prisoners in unwelcome fashion.

Previously in prurient Canadian prison news...

Seeing the violence inherent in the system

Our incarceration rituals mask the violence done upon a growing segment of the population. The medicalization of capital punishment - turning it from an explicit act of public retribution to a sanitized procedure that anaesthetizes the process for the audience if not for the victim - is the most explicit form of this transformation. But so too is incarceration as compared to the forms of physical punishment that once were common.

And so Peter Moskos wants to bring back flogging. Not because he wants to beat prisoners but rather because making the punishment a more unpleasant spectacle for the voters who demand harsh sentences for minor offences might make them reduce their demand for punishment. Moskos proposes allowing convicts to choose two lashes per year of incarceration in lieu of incarceration. He writes:

When I started writing In Defense of Flogging, I wasn't yet persuaded as to the book's basic premise. I, too, was opposed to flogging. It is barbaric, retrograde, and ugly. But as I researched, wrote, and thought, I convinced myself of the moral justness of my defense. Still, I dared not utter the four words in professional company until after I earned tenure. Is not publishing a provocatively titled intellectual book what academic freedom is all about?

Certainly In Defense of Flogging is more about the horrors of our prison-industrial complex than an ode to flogging. But I do defend flogging as the best way to jump-start the prison debate and reach beyond the liberal choir. Generally those who wish to lessen the suffering of prisoners get too readily dismissed as bleeding hearts or soft on criminals. All the while, the public's legitimate demand for punishment has created, because we lack alternatives, the biggest prison boom in the history of the world. Prison reformers—the same movement, it should be noted, that brought us prisons in the first place—have preached with barely controlled anger and rational passion about the horrors of incarceration. And to what end? Something needs to change.

Certainly my defense of flogging is more thought experiment than policy proposal. I do not expect to see flogging reinstated any time soon. And deep down, I wouldn't want to see it. And yet, in the course of writing what is, at its core, a quaintly retro abolish-prison book, I've come to see the benefits of wrapping a liberal argument in a conservative facade. If the notion of tying people to a rack and caning them on their behinds à la Singapore disturbs you, if it takes contemplating whipping to wake you up and to see prison for what it is, so be it! The passive moral high ground has gotten us nowhere.

...

So is flogging still too cruel to contemplate? Perhaps it's not as crazy as you thought. And even if you're adamant that flogging is a barbaric, inhumane form of punishment, how can offering criminals the choice of the lash in lieu of incarceration be so bad? If flogging were really worse than prison, nobody would choose it. Of course most people would choose the rattan cane over the prison cell. And that's my point. Faced with the choice between hard time and the lash, the lash is better. What does that say about prison?

The essay engages and provokes throughout. Moskos argues that incarceration replicates one of the harsher historic punishments - banishment.

I'm pulled to agree with Moskos. But I worry. I worry that the best evidence seems to suggest that prison deters crime mainly through incapacitation - criminals cannot commit crimes except against other criminals while behind bars. There's good evidence for deterrent effects through things like California's three strikes legislation, but incapacitation matters a lot. Longer term crime rates could go down with a switch from prisons to flogging if those committing crimes were better able to maintain a connection to the community and if prisons encourage recidivism. But rates would almost have to increase in the short term: those viewing flogging as much cheaper than a jail term would expect a reduction in the effective expected punishment for a criminal act. I'd hope that Moskos's prescription would maintain the use of prisons as preventative detention for the really scary crazy dangerous cases.

A decade ago I would have worried that reducing the price of punishment experienced by the state would increase the total amount of punishment. If it's expensive to keep a prisoner for a year, the state might be reluctant to put marginal offenders in jail. That's not proven much of a constraint, so I worry rather less about that now.

But I do worry that the mob used to enjoy the spectacle of a public hanging.

There’s a fascination about a hanging, or a good flogging, and the first time I saw a man shot from a gun – at Kabul, that was – I couldn’t take my eyes off it. I’ve noticed, too, that the most pious and humanitarian folk always make sure they get a good view, and while they look grim or pitying or shocked they take care to miss none of the best bits.

Bonus points for those who pick the quote without Googling.

I hope men would recoil and think better of a public flogging of a cancer sufferer whose only crime was smoking a weed that stopped his chronic vomiting long enough to let him eat. But an awful lot of people enjoy watching Cops. I worry Moskos might be overly optimistic about the elasticity of public willingness to punish with respect to the unpleasantness of the display. I wonder how many would really be averse to seeing the violence inherent in the system.

Private Prisons

I'm a fan of privatisation. But prisons would be low on my "Things to privatize tomorrow" list.

Andrei Shleifer's brilliant "State versus Private Ownership" argues that we want state ownership in the following kind of case (quoting from the paper):

1. opportunities for cost reductions that lead to non-contractible deterioration of quality are significant;
2. innovation is relatively unimportant;
3. competition is weak and consumer choice is ineffective; and,
4. reputational mechanisms are also weak.

What about prisons? A lot of the current worries in New Zealand about private-public partnerships on prisons focus on that the private prison might pay low wages and achieve poorer results, but that's not really a problem in the Shleifer world. Why? Quality of guards, or at least their pay, is contractible. If the government wants to make sure a private prison hires high quality guards, they can write that into the terms of the PPP contract. More importantly, the government can contract for outcomes as well as outputs: write into the contract that the prison is paid a bonus for every prisoner who does not reoffend for some period after release. Make the bonus large enough, and prisons will have a strong incentive to innovate in prisoner rehabilitation. It's damned hard to think of any of the standard critiques about private prisons that can't be solved through reasonable contracting, and it's easy to imagine lots of innovative upsides through creative contracting.

But they can't solve this one. The League of Ordinary Gentlemen (HT Wilkinson) points to NPR reporting on the corrupt interaction of the private prison lobby with legislators to throw more people into prison. It turns out that private prison lobbying was behind Arizona's rather nasty policy towards illegal immigrants.

Last year, two men showed up in Benson, Ariz., a small desert town 60 miles from the Mexico border, offering a deal.

Glenn Nichols, the Benson city manager, remembers the pitch.

"The gentleman that's the main thrust of this thing has a huge turquoise ring on his finger," Nichols said. "He's a great big huge guy and I equated him to a car salesman."

What he was selling was a prison for women and children who were illegal immigrants.

"They talk [about] how positive this was going to be for the community," Nichols said, "the amount of money that we would realize from each prisoner on a daily rate."

But Nichols wasn't buying. He asked them how would they possibly keep a prison full for years — decades even — with illegal immigrants?

"They talked like they didn't have any doubt they could fill it," Nichols said.

That's because prison companies like this one had a plan — a new business model to lock up illegal immigrants. And the plan became Arizona's immigration law.

Public prisons have slacker incentives on this margin: the prison manager can consume perquisites proportionate to discretionary budget, but can't easily translate that into income.

I don't expect PPP arrangements for prisons in New Zealand to lead to prison lobbying for draconian legislation. It's too easy to monitor that kind of thing in a small country. And the upsides if the contracting is innovative are really large. But it's still enough to put prisons close to last on my "to privatize" list. At the margin, it helps push for putting more people in prison and against liberalizing laws against victimless crimes.