It is a question we have asked hundreds of times since we were old enough to visit the candy store with a few coins in our pockets. In a market economy, each of us makes hundreds of decisions about what to eat, drive and wear, and our choices are guided in large part by prices.
Governments often operate in the dark when it comes to cost, particularly in the realm of criminal justice.
A recent article in The New York Times notes that Missouri judges will now be informed of the costs associated with the sentences they issue. According to the article:
A second-degree robber, a judge could be told, would carry a price tag of less than $9,000 for five years of intensive probation, but more than $50,000 for a comparable prison sentence and parole afterward. The bill for a murderer's 30-year prison term: $504,690.
In California, for example, budget woes have prompted the early release of prisoners. The New York Times noted that "The goal is to reduce the number of inmates in the state's 33 prisons next year by 6,500 -- more than the entire state prison population in 2009 of Nebraska, New Mexico, Utah or West Virginia." It costs California about $47,000 on average to house a prisoner for a year, and currently the Golden State spends more on incarceration than higher education. Given the state's budget crisis, these costs are coming under scrutiny, and the state is moving to release the least dangerous prisoners early to cut costs and relieve overcrowding.
There are some who argue that you shouldn't put a price tag on "justice." But imagine grocery shopping in a store without any prices. Guided only by desires, the cart might get filled with filet mignon and caviar, not to mention those yummy whoopee pies from the bakery.
But in a world of limited resources -- that is, the real world -- every expenditure represents a tradeoff. More of this means less of that. How can anyone make good decisions without cost information?
Yet when it comes to cost, government often operates in the dark. How much does it "cost" to borrow a library book? At your local "free" public library there is no price, but there is a cost. Just like there is a price but no cost for a visit from police, a criminal trial or a year spent in jail.
Government can't and shouldn't attempt to charge for its services -- you don't want to have to enter your credit card number for the fire department when your house is on fire. But understanding costs can lead to better decision-making.
Texas is hardly a state known for coddling criminals, or for lavish public spending. But when the Texas Sunset Commission looked at the operations of the Texas Department of Criminal Justice, it recommended "significant additional funds to TDCJ for offender treatment and rehabilitation programs proven to reduce recidivism." Why? Because a dollars and sense case was made that it was worthwhile to invest in rehabilitation and education for inmates to avoid the costs of future visits to the pokey. The Sunset Commission noted that legislators lacked good data on what programs did and didn't work, and how much various approaches cost. Recidivism, it turns out, is a huge cost driver. But without insight into the relative costs and effectiveness of rehabilitation programs, lawmakers were operating in the dark.
They say that justice should be blind. When it comes to guilt or innocence, that is certainly true. But when it comes to putting scarce resources to use to maximize public value, we need to better understand costs and trade-offs.
