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Rio Grande Foundation
P.O. Box 2015 Tijeras, NM 87059

505-286-2030

The Pros of Privately-Housed Cons:
New Evidence on the Cost Savings of Private Prisons

click here to download in Adobe Acrobat format

By Matthew Mitchell
Research Economist

The Rio Grande Foundation has released a new study comparing the
per-prisoner costs of incarceration across 46 states. Research economist
Matthew Mitchell used regression analysis to isolate the factors that affect
per-prisoner department of corrections spending.

He found that states with a large percentage of prisoners in private custody
spent less per-prisoner than other states. States like New Mexico, for
example, with forty-five percent of their prisoners under private
management, spent $9,660 less per-prisoner in 2001 than non-privatized
states. Given New Mexico's prison population, that is an annual savings of
over $50 million.

Other factors being equal, an increase in privately-housed prisoners was
found to lower per-prisoner costs markedly. On average, states with five
percent of their prisoners in private custody spent 14 percent less
per-prisoner than non-privatized states. States with forty-five percent
privatization, meanwhile, spent 32 percent less per-prisoner than
non-privatized states.

New Mexico was one of the first states to privatize its prisons and has a
higher percentage of prisoners in private custody than any other state in
the union.

Mitchell's study takes its place among a growing body of studies suggesting
that private prisons are both cheaper and safer than public prisons.

Though not the focus of his research, Mitchell also found that states that
enjoy right to work legislation spent $9,365 less per-prisoner in 2001 than
states without such legislation. The evidence seems to suggest that if New
Mexico joined the 22 other states with right to work laws, it would reduce
per-prisoner spending even more.

Download Adobe Acrobat document of full report