W w w. H a m I l t o n p r o j e c t. O r g acknowledgements



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Melissa S. Kearney, Benjamin H. Harris, Elisa Jácome, and Lucie Parker

POLICY MEMO  |  MAY 2014

Ten Economic Facts about Crime and  

Incarceration in the United States

W W W . H A M I L T O N P R O J E C T . O R G



ACKNOWLEDGEMENTS

The Hamilton Project is grateful to Karen Anderson, E. Ann Carson, 

David Dreyer, Jens Ludwig, Meeghan Prunty, Steven Raphael, and 

Michael Stoll for innumerable insightful comments and discussions. 

It is also grateful to Chanel Dority, Brian Goggin, Laura Howell, 

Peggah Khorrami, and Joseph Sullivan.   

MISSION STATEMENT

The Hamilton Project seeks to advance America’s promise of 

opportunity, prosperity, and growth.

We believe that today’s increasingly competitive global economy 

demands public policy ideas commensurate with the challenges 

of the 21st Century.  The Project’s economic strategy reflects a 

judgment that long-term prosperity is best achieved by fostering 

economic growth and broad participation in that growth, by 

enhancing individual economic security, and by embracing a role 

for effective government in making needed public investments. 

Our strategy calls for combining public investment, a secure social 

safety net, and fiscal discipline.  In that framework, the Project 

puts forward innovative proposals from leading economic thinkers 

— based on credible evidence and experience, not ideology or 

doctrine — to introduce new and effective policy options into the 

national debate.

The Project is named after Alexander Hamilton, the nation’s 

first Treasury Secretary, who laid the foundation for the modern 

American economy.  Hamilton stood for sound fiscal policy, 

believed that broad-based opportunity for advancement would 

drive American economic growth, and recognized that “prudent 

aids and encouragements on the part of government” are 

necessary to enhance and guide market forces.  The guiding 

principles of the Project remain consistent with these views.




The Hamilton Project  •  Brookings   1

Ten Economic Facts about Crime and  

Incarceration in the United States

Introduction



Crime and high rates of incarceration

 impose tremendous costs on society, with lasting negative 

effects on individuals, families, and communities. Rates of crime in the United States have been falling steadily, but still 

constitute a serious economic and social challenge. At the same time, the incarceration rate in the United States is so 

high—more than 700 out of every 100,000 people are incarcerated—that both crime scholars and policymakers alike 

question whether, for nonviolent criminals in particular, the social costs of incarceration exceed the social benefits.

While there is significant focus on America’s incarceration policies, it is important to consider that crime continues to 

be a concern for policymakers, particularly at the state and local levels. Public spending on fighting crime—including 

the costs of incarceration, policing, and judicial and legal services—as well as private spending by households and 

businesses is substantial. There are also tremendous costs to the victims of crime, such as medical costs, lost earnings, 

and an overall loss in quality of life. Crime also stymies economic growth. For example, exposure to violence can inhibit 

effective schooling and other developmental outcomes (Burdick-Will 2013; Sharkey et al. 2012). Crime can induce 

citizens to migrate; economists estimate that each nonfatal violent crime reduces a city’s population by approximately 

one person, and each homicide reduces a city’s population by seventy persons (Cullen and Levitt 1999; Ludwig and 

Cook 2000). To the extent that migration diminishes a locality’s tax and consumer base, departures threaten a city’s 

ability to effectively educate children, provide social services, and maintain a vibrant economy.

The good news is that crime rates in the United States have been falling steadily since the 1990s, reversing an upward 

trend from the 1960s through the 1980s. There does not appear to be a consensus among scholars about how to account 

for the overall sharp decline, but contributing factors may include increased policing, rising incarceration rates, and 

the waning of the crack epidemic that was prevalent in the 1980s and early 1990s.

Despite the ongoing decline in crime, the incarceration rate in the United States remains at a historically 

unprecedented level. This high incarceration rate can have profound effects on society; research has shown 

that incarceration may impede employment and marriage prospects among former inmates, increase poverty 

depth and behavioral problems among their children, and amplify the spread of communicable diseases among 

Melissa S. Kearney, Benjamin H. Harris, Elisa Jácome, and Lucie Parker



2  

Ten Economic Facts about Crime and Incarceration in the United States

growth and broad participation in that growth. Elevated rates of 

crime and incarceration directly work against these principles, 

marginalizing individuals, devastating affected communities, and 

perpetuating inequality. In this spirit, we offer “Ten Economic 

Facts about Crime and Incarceration in the United States” to 

bring attention to recent trends in crime and incarceration, the 

characteristics of those who commit crimes and those who are 

incarcerated, and the social and economic costs of current policy.

Chapter 1 describes recent crime trends in the United States and 

the characteristics of criminal offenders and victims. Chapter 2 

focuses on the growth of mass incarceration in America. Chapter 

3 presents evidence on the economic and social costs of current 

crime and incarceration policy.

Introduction continued from page 1

disproportionately impacted communities (Raphael 2007). These 

effects are especially prevalent within disadvantaged communities 

and among those demographic groups that are more likely to 

face incarceration, namely young minority males. In addition

this high rate of incarceration is expensive for both federal and 

state governments. On average, in 2012, it cost more than $29,000 

to house an inmate in federal prison (Congressional Research 

Service 2013). In total, the United States spent over $80 billion 

on corrections expenditures in 2010, with more than 90 percent 

of these expenditures occurring at the state and local levels 

(Kyckelhahn and Martin 2013).

A founding principle of The Hamilton Project’s economic strategy 

is that long-term prosperity is best achieved by fostering economic 





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