The Vera Institute of Justice
is an independent nonprofit
organization that combines research,
demonstration projects, and
technical assistance to help leaders
in government and civil society
improve the systems people rely on
for justice and safety.
The Cost-Benefit Knowledge
Bank for Criminal Justice (CBKB)
is a project of Vera’s Cost-Benefit
Analysis Unit and is funded by the
U.S. Department of Justice’s Bureau
of Justice Assistance. CBKB helps
to broaden the knowledge base
of practitioners and policymakers
about criminal justice cost-benefit
analysis, deepen the knowledge
and practice in this area, and
support practitioners in building
their capacity to promote, use, and
interpret cost-benefit analysis in
criminal justice settings.
For more information, please visit
the CBKB website at cbkb.org or
contact Tina Chiu at 212-376-3038
For More Information
Vera Institute of Justice
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expenses such as food, clothing, and medical care: these are the marginal costs
of a small increase or decrease in the prison population.
SHORT-RUN AND LONG-RUN MARGINAL COSTS
Marginal costs depend on the size of the change in workload and how the gov-
ernment adjusts the budget in response to this change. This means that more
than one marginal cost could potentially be used in justice-system CBAs. Costs
that change immediately with even a small change in workload are often called
short-run marginal costs (or “variable costs”).
When a policy has a larger im-
pact on workload, staffing costs need to be considered, yet it may take time for
the government to change these step-fixed costs. Thus, the long-run marginal
cost includes the short-run marginal cost, as well as the step-fixed staffing costs
that change as governments modify staffing levels in future budget cycles.
Cost-benefit studies of criminal justice initiatives should use the long-run mar-
ginal cost when the effect of the policy on workload is expected to affect staffing
needs. Analysts should use the short-run marginal cost when the policy impact
anticipated is not large enough to affect staffing.
AN EXAMPLE OF MARGINAL COSTS IN THE JUSTICE SYSTEM
The marginal cost of incarceration to use in a CBA depends on the estimated
change in the size of the inmate population. If the population is expected to
change modestly, only variable costs—for expenses such as food, clothing, and
medical care—will be affected. These are the short-run marginal costs. If the
size of the inmate population is expected to change considerably—for example,
if the prison could close a housing unit—analysts must consider the step-fixed
costs of staffing in addition to the short-run costs. These are the long-run mar-
ginal costs. The following table illustrates the differences among these costs
relative to the average cost of incarceration in Washington State’s prisons and
jails. Note that short-run marginal costs are lower than long-run marginal costs,
which include step-fixed expenses. Long-run marginal costs are lower than aver-
age costs, which include fixed expenses.
Annual Per-Inmate Costs in Washington State, 2009
3
AVERAGE COST
LONG-RUN
MARGINAL COST
SHORT-RUN
MARGINAL COST
Prison $31,446 $13,921 $4,495
Jail $28,900 $21,469 $3,457
SOURCES
1 Douglas C. McDonald, “The Cost of Corrections: In Search of the Bottom Line,” Research in Corrections 2,
no. 1 (1989): 1-25.
2 Paul Heroux, “Addressing the prison’s budget and population,” Taunton Daily Gazette, Feb. 17, 2011.
3 Washington State Institute for Public Policy, WSIPP’s Benefit-Cost Tool for States: Examining Policy Options
in Sentencing and Corrections, August 2010.
www.vera.org
B
ureau of Justice Assistance
U.S. Department of Justice
This project is supported by Grant No. 2009-MU-BX
K029 awarded by the Bureau of Justice Assistance.
The Bureau of Justice Assistance is a component of
the Office of Justice Programs, which also includes
the Bureau of Justice Statistics, the National
Institute of Justice, the Office of Juvenile Justice
and Delinquency Prevention, the Office for Victims
of Crime, the Community Capacity Development
Office, and the Office of Sex Offender Sentencing,
Monitoring, Apprehending, Registering, and
Tracking. Points of view or opinions in this document
are those of the author and do not necessarily
represent the official position or policies of the
U.S. Department of Justice.