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Prison economics. Part I.

The United States always tends to be the first one in any sphere. It didn't stay behind in the putting people behind the bars.The US has the highest incarceration rates in the world. The second place is taken by Russia. In 2007, the US peaked in its incarceration rates and those numbers are comparable with the imprisoned people during the years from 1934 to 1953 in Soviet Union ("The Gulag Archipelago" A. Solzhenitsyn). That is 23.4% of the world's prison and jail population was in the US, and this is while there is less than 5% of the world's population living in the US. Does it mean that people in the US tend to commit more crimes or is it a matter of profits to some?

Well, according to the professor in the University of Chicago, G. Becker (the founder of the theory of economics of crime and law enforcement, a Nobel laureate in economics): "The essence of the economic approach to crime is amazingly simple - It consists in the fact that people decide whether to commit a crime or not, comparing the benefits and costs of crime. Evaluation of benefits of committing a crime is pretty simple, those are mainly money benefits: stolen or criminally spent money, the value of stolen motor vehicles or items taken during burglaries and robberies, and so on." Economic approach suggests that people are rational in their decisions to commit a crime, thus, they weigh all the possible costs and benefits beforehand.  Let me not go far deep into the theory of committing a crime, but to the roots of such a huge number of imprisoned.

                                            Photo source: http://prison-visits.com/ 

Tel*Link - one of the biggest America's providers of phone services in prisons.While there is a monopoly to producer, prisoners face relative inelastic demand for phone calls to their lawyers or the loved ones. Research shows that increased communication with family while in prison reduces the risk that incarcerated people will re-offend after their release. But it seems that stakeholders do not want any competition there and thus keep the monopoly prices (up to $0.89 per minute). While the regulation is loose and certain reforms are being considered, prisoners continue making calls spending their last cent to bring an additional buck to a few people.


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