The Search for the Frugal Grail: An Empirical Assessment of the Cost-Effectiveness of Public Versus Private Correctional Facilities

Abstract

The privatization of corrections has become a growth industry in the United States. Privatization advocates often argue from a "public choice" theoretical perspective, holding that private entities will be more efficient providers of correctional services than their public counterparts (i.e., the "efficiency hypothesis"). This contention, however, has not been empirically demonstrated due to certain methodological limitations such as the selection of model facilities, inadequate sample sizes, and a lack of sophisticated statistical controls. This paper seeks to remedy these empirical problems surrounding the efficiency hypothesis by examining a nationwide census of public and private facilities for juveniles. The results indicate that, on the whole, private correctional facilities for juveniles are no more cost-effective than public facilities; yet, specific types of private institutions (low security, non-detention center-type facilities such as halfway houses and shelters) tend to be more cost-effective under private management.