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 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 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.