2013
DOI: 10.1111/ecaf.12005
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Do Private Prisons Really offer Savings Compared with their Public Counterparts?

Abstract: Private contracting of public services has been alleged to reduce costs. We address the critical question of whether private contracting really saves money, using the US prison privatisation experience as an example. Although the consensus in the literature identifies such savings, we raise economic issues of incomplete contracting, asymmetric information and moral hazard, which complicate matters. We discuss explicit, implicit, and agency costs that show that measuring the savings and quality impact of privat… Show more

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Cited by 20 publications
(17 citation statements)
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References 17 publications
(32 reference statements)
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“…For example, 8 percent of prisoners in the US (with state rates ranging from 0 percent to 44 percent) (Kim and Price 2014;Mason 2012) and 13 percent of prisoners in the UK are held in privately run facilities (Kish and Lipton 2013;Prison Reform Trust 2011). While many studies have attempted to compare the public and the private prisons, comparability problems exist across levels of security, accounting methods, definitions of service and measurement of costs (Kish and Lipton 2013). The quality of the prisons could be reviewed according to their contribution to the reduction of the risk of recidivism.…”
Section: Contracting Out Of Prison Services Empirical Resultsmentioning
confidence: 99%
See 1 more Smart Citation
“…For example, 8 percent of prisoners in the US (with state rates ranging from 0 percent to 44 percent) (Kim and Price 2014;Mason 2012) and 13 percent of prisoners in the UK are held in privately run facilities (Kish and Lipton 2013;Prison Reform Trust 2011). While many studies have attempted to compare the public and the private prisons, comparability problems exist across levels of security, accounting methods, definitions of service and measurement of costs (Kish and Lipton 2013). The quality of the prisons could be reviewed according to their contribution to the reduction of the risk of recidivism.…”
Section: Contracting Out Of Prison Services Empirical Resultsmentioning
confidence: 99%
“…The quality of confinement is similar across privately and publicly managed systems, with publicly managed prisons delivering slightly better skills training and having slightly fewer inmate grievances. Kish and Lipton (2013) summarized several prison studies to illustrate the inconclusiveness of the cost savings of private prisons over their public counterparts. Private firms have an advantage in building new prison facilities, both in terms of cost and time and also have a slight operating-cost advantage.…”
Section: Contracting Out Of Prison Services Empirical Resultsmentioning
confidence: 99%
“…In the short term, private correctional service providers and impacted communities could be financially compensated for the closure of prison beds, or be paid to provide EM services at a comparative rate as providing prison beds. In the long term, however, private sector involvement in the operation of EM must be considered in light of the tensions between the potential cost savings it brings (although even this is uncertain: [108]) and industry pressure to expand EM's future reach.…”
Section: Mitigating Against Back-end Net Strengthening and Net Wideningmentioning
confidence: 99%
“…Opperman raises this question, but I'm not sure he answers it. In 2013 Economic Affairs published an interesting study by two American economists (Kish and Lipton ). While recognising the potential of privatisation to reduce costs, they argue that many published studies in the US do not take into account the full range of costs, including implicit and agency costs associated with the process of contracting.…”
Section: Privatising Prisons Can Be Controversialmentioning
confidence: 99%