The Council of Economic Advisers

May 2018

September 29, 2017

Returns on Investments in 

Recidivism-Reducing Programs
Executive Summary 

May 2018

Crime imposes a significant burden on Americans’ well-being and tax-financed resources. 

These costs are amplified by a cycle of crime that results in re-arrest rates for released 

American prisoners in excess of 50 percent. Rigorous and evidence-based prison reforms are 

proposed to break the crime cycle, thereby reducing future crime and lowering incarceration 

expenditures by facilitating more successful re-entry upon prison release. In this policy brief, 

CEA reviews the evidence on the underlying factors that determine the value of such prison 

programs and provides estimates on their rates of return.1

 There are numerous programs that 

have been tried in one form or another over many decades. We do not aim to cover the entire 

scope of prison reform programs but focus instead on three main categories: programs that 

address mental health, substance abuse, and education and that are delivered inside 

correctional facilities.2

 

We find that there is great variation in the effectiveness across programs so that reallocation 

of budgets from poorly to well performing programs may both lower spending and improve 

results. In addition, CEA finds evidence that certain individual programs can reduce crime as 

well as reduce spending by lowering long-run incarceration costs. Programs that save at least 

one dollar in crime and incarceration costs for every dollar spent are deemed cost effective. 

More specifically, with a focus on rigorous studies of the programs that have been previously 

implemented, CEA finds that, on average, programs that address the prisoner’s mental health 

or substance abuse problems may reduce the cost of crime by about $0.92 to $3.31 per 

taxpayer dollar spent on prison reform and long-run incarceration costs by $0.55 to $1.96, for 

a total return of $1.47 to $5.27 per taxpayer dollar. 

Despite these positive returns, there are many programs, such as education, where the 

evidence base is inconsistent and rates of return more uncertain. Given this uncertainty, CEA 

estimates how much rates of recidivism would have to be reduced in order for the programs to 

break even given their costs. We calculate that educational programming needs only a modest 

impact on recidivism rates of around 2 percent in order to be cost effective. 

Overall, increased investment in better evidence is needed to guide future investments into 

programs to reduce recidivism. Many programs, even if they are found to be cost effective may 

have small sample sizes or unique characteristics that may be difficult to replicate or scale up, 

and some studies with high-quality research designs are too dated to provide needed insight. 

Carefully designed, broad-based national programs that target a wide variety of offenders in 

                                                            

1

 CEA thanks Jennifer L. Doleac for providing us with help in reviewing the literature on the effectiveness of 

recidivism programs by supplying us with her 2018 presentation “Strategies to successfully reintegrate formerly‐

incarcerated youth into their communities: A review of the evidence.”   2

 There is one exception.  Some mental health treatments are provided outside of the prison post release and we 

use these studies when appropriate.   
CEA • The Rate of Return to Prison Reforms 1 

conjunction with carefully designed empirical evaluations would improve the ability of 

policymakers to allocate criminal justice funds to achieve the greatest possible social benefits. 
CEA • The Rate of Return to Prison Reforms 2 

1. Introduction 

 

 Crime imposes a high fiscal burden as well as large social costs. In 2016, the United States 

spent over $270 billion (1.4 percent of GDP) funding the criminal justice system and 

maintaining prisons while real spending on prisons has grown by 70 percent over the last 20 

years (CEA 2016). In addition, victims and society at large have incurred significant costs from 

crime in terms of pain and suffering, reduced quality of life, property losses, medical costs, and 

loss of life. Communities often bear the cost of crime in the form of lower property values, 

reduced business investment, and lost economic opportunity. Altogether, the damages 

imposed upon society represented an additional 1.5 percent of GDP in 2014 (CEA 2016), 

yielding a total burden of 2.9 percent of GDP (roughly $500 billion). 

These large social costs of crime are partly attributable to the high probability that prisoners 

exiting State and Federal facilities may eventually commit new crimes after leaving prisons. 

More than three-quarters of State offenders are re-arrested within five years of release (Bureau 

of Justice Statistics, 2016) and approximately 50 percent of released Federal prisoners will be 

re-arrested (United States Sentencing Commission, 2016) within 10 years of release.3

 Thus, 

efforts to reduce the recidivism rate for former prisoners could substantially lower the burden 

of crime in the U.S. 

To address the high burden of crime, the Trump Administration has released principles on 

prison reform and re-entry programs, aiming to improve successful re-entry into society and 

reduce recidivism. The Administration intends to enact policies that: 

 Evaluate existing incentives for re-entry program participation and develop 

improvements that tie successful program completion to incentives while 

incarcerated. 

 Evaluate and implement evidence-based recidivism reduction and re-entry 

programs to promote the successful re-entry of Federal inmates. 

 Ensure all inmates have access to recidivism reduction programs that meet their 

needs by enhancing tools to reduce existing risk. 

 Expand inmate access-to-work programs to enable all eligible inmates to gain job 

skills that prepare them for successful re-entry from prison. 

 Evaluate and facilitate public and private partnerships aimed at improving 

employment opportunities for inmates before and after their release. 

 Prioritize funding and support Federal programs that have proven to be effective at 

reducing State prison recidivism. 

                                                            

3

Based off of a sample of 25,431 prisoners who are U.S. citizens, discharged in 2005, with valid FBI numbers that 

allow them to be located in criminal history repositories, and are not dead, escaped or detained in any way. 
CEA • The Rate of Return to Prison Reforms 3 

These principles focus on improving the lives of all Americans by using government resources 

to reduce crime, enhance public safety, and increase successful re-entry of former prisoners, 

while at the same time not burdening taxpayers with inefficient programs that do not meet 

their goals. 

In this report, we focus on recidivism. For the purposes of this policy brief, recidivism is defined 

as re-incarceration for the purposes of calculating return on investment.4 This report assesses 

the total return on prison reform investments aimed at reducing recidivism according to the 

Trump Administration’s principles stated above. Prison reform, if properly chosen and 

implemented, would potentially lower spending and reduce recidivism simultaneously 

through two channels. First, as we find that there is great variation in effectiveness across 

programs, reallocation of budgets from poorly to well performing programs may both lower 

spending and improve overall results. In addition, certain individual programs may result in 

both lower damages to potential victims and communities from crimes avoided, as well as 

reductions in future costs of incarceration. Increased spending on programs during an initial 

prison stay can be offset by lower long-run prison costs if these programs lower the probability 

that a person will return to prison in the future. 

This policy brief reviews the literature on programs that address the mental health and 

substance abuse problems of offenders (a subset off the numerous types of programs that are 

offered). These programs are not applicable for all prisoners but are important forms of 

treatment. It is estimated that over 60 percent of prisoners have drug or alcohol addiction 

problems. In addition, 76percent of prisoners with mental health problems are estimated to 

be dependent upon drugs (compared to 53 percent of inmates without mental health 

problems) (BJS 2006). Given the Administration’s focus on evidence-based reforms, we focus 

on rigorous studies that find programs--some work to reduce recidivism and some do not. In 

addition, we also discuss educational programs and the lack credible evidence to date that 

would allow us to evaluate such programs. 

In reviewing the evidence base, CEA finds that, on average, mental health treatment--

specifically cognitive behavioral therapies--and substance abuse treatments can generate net 

social benefits. There is no one particular program that CEA recommends as the success and 

failure of any one program may depend upon many details that are beyond the scope of this 

report. Nonetheless, we point out that there exist a number of mental health and substance 

                                                            

4

 Our literature review includes estimates of recidivism that are based on a diverse set of recidivism definitions, 

including return to criminal behavior, re-arrest, and re-incarceration. Under the assumption that any percent 

reduction in any recidivism measure leads to the same percent reduction in re-incarceration, the treatment 

effects from all studies can be used to estimate reductions in re-incarceration. We do not include recidivism 

measures that consider a return to illegal drug usage, for example. 
CEA • The Rate of Return to Prison Reforms 4 

abuse programs that can reduce both crime and incarceration costs simultaneously.5 Our 

overall finding is that these programs can reduce crime when offered to an inmate who could 

benefit from the treatments provided, providing a value of $0.92 to $3.31 per taxpayer dollar 

spent, and reduce long-run incarceration costs of $0.55 to $1.96 per taxpayer dollar spent, for 

a total return of $1.47 to $5.27 per taxpayer dollar spent for mental health and drug treatments 

respectively. In addition to these programs, there is a large set of programs with insufficient 

evidence to evaluate them properly. This includes prison education programs, such as GED 

completion. The empirical studies that do exist should be interpreted cautiously due to 

methodological issues such as selection biases in and out of programs. In the face of this 

uncertainty, CEA estimates what the recidivism effects would have to be in order for these 

educational programs to break even, given their costs. We estimate that education programs 

need only reduce recidivism by about 2 percent in order to recover costs--a modest reduction 

in order for these programs to be cost effective. Investments that aim to broaden the evidence 

base will need to be made to evaluate whether programs meet this target effect. 

 

The report is briefly outlined as follows. Section 2 provides background data on U.S. crime and 

incarceration. Section 3 estimates the total costs of crime for a number of crime categories. 

Section 4 examines the literature on the effectiveness of in-prison programs in reducing 

recidivism. Section 5 calculates the return on investment to prison reforms. Section 6 

concludes and discusses limitations of the analysis. 

2. The Federal Prison Population 

The Federal prison population has been in decline since 2013 when it hit a peak of nearly 

220,000 inmates. At the end of FY 2016, there were 192,170 Federal prisoners and 1.32 million 

State prisoners held in correctional facilities. The average annual incarceration cost per 

Federal prisoner was $32,805 in 2016, which in inflation-adjusted terms has increased only 

slightly since 2000. (See Figure 1.) 

Incarceration in the Federal system in 2018 has been predominantly driven by convictions for 

drug, weapons, and sex-related offenses (Figure 2). The imprisoning crime profile for Federal 

prisoners differs sharply from State prisoners, as shown in Figure 4; property offenses 

(burglary, larceny, etc.) comprise a far larger share for State prisoners while weapons, drug, 

and sex offenders represent far smaller shares for the State prison population.6

 Despite these 

                                                            

5

 Other types of programs work as well. For example, there is also growing evidence that reducing the amount of 

post-release supervision reduces criminal behavior. By its very nature, spending less on supervising prisoners 

reduces government expenditures on the criminal justice system. See Hennigan et al. (2010) or Barnes et al. 

(2012). 

6

 The share of state prisoners who are in on substance abuse related crimes is greater than zero, but the FBI does 

not report those numbers. 
CEA • The Rate of Return to Prison Reforms 5 

differences, re-arrests often cross-over between Federal and State systems such that a 

substantial share of re-arrested Federal prisoners will be arrested on State charges.

Figure 1. Federal Inmate Population and Cost per Inmate, 2000–2016 

(Number of Inmates) (2016 Dollars)

(Year) 

Sources: Federal Bureau of Prisons (2003–2016); Bureau of Justice Statistics (2009, 2016).

Prison reforms that provide mental health, substance abuse, and other interventions for U.S. 

inmates have the potential to reduce the crimes. In a 2016 report, the United States Sentencing 

Commission estimates that nearly 50 percent of released Federal prisoners will eventually be 

re-arrested within eight years and 32 and 25 percent will be re-convicted and re-incarcerated, 

respectively. The majority of these re-arrests will occur in the first 5 years following release.7

 

The estimated size of the 2017 Federal release class is 44,755, based on the population in 2017 

and the historic average annual release rate. Although 50 percent of this class would be 

expected to eventually be re-arrested, only 25 percent would be re-incarcerated. Under the 

assumption that there is no change in sentencing, we assume here that lower recidivism 

translates into actual lower crime (not simply that crimes continue to be committed at the 

same rate but people simply are not arrested). Thus, as a hypothetical example, suppose we 

                                                            

7

 These statistics are not generally collected past 10 years, thereby leading to an underestimate over the lifetime 

of a released inmate. 

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

 -

 50,000

 100,000

 150,000

 200,000

 250,000

2000 2002 2004 2006 2008 2010 2012 2014 2016

Inmate Population (Left Axis) Cost Per Inmate (Right Axis)
CEA • The Rate of Return to Prison Reforms 6 

could reduce recidivism by 20 percent. This would result in over 1,000 fewer incarcerations 

among a one-year cohort of federal prisoners. 

The analysis that follows first discusses how to measure the reduction in crime and prison costs 

from a given reduction in recidivism. Thereafter, we look at how effective different programs 

have been in reducing recidivism, which provide empirical estimates of how far the blue line 

lies below the red line in reality. Using these data, we can then estimate the reduction in crime 

and prison costs associated with a given prison program. The rate of return of a program is then 

the value of these benefits relative to program costs. 

3. The Cost of Crime and Incarceration 

The crimes that lead to Federal and State imprisonment, as displayed in Figure 2, 

include both tangible and intangible costs for Americans (Heaton, 2010). We typically think of 

tangible costs as involving direct out-of-pocket expenditures by government, businesses and 

individuals, including any lost productivity. For example, direct costs include medical 

treatment for victims, property damage, installation of security measures such as alarms, wage 

losses to the victim due to injury and to the perpetrator due to punishment, and the costs of 

incarceration and public legal services for accused criminals. These costs are, in principle, 

measurable with sufficient data. 

However, there are additional intangible costs to both victims and non-victims. Intangible 

costs tend to be more case specific or do not have an easily identifiable market-based price. 

These include, for example, the psychological effects of victimization incurred by the victim, 

the victim’s family, or society at large, the loss in the quality of life that may be physical or 

mental and lost parenting opportunities due to incarceration. As would be expected, 

intangible costs are, by their very nature, more difficult to measure. However, they are 

important to capture because for some crimes they represent the preponderance of the cost. 

For example, Miller et al. (1996) and French et al. (2004) estimate that at least 80 percent of the 

total cost of a serious assault is due to these intangible costs. Thus, not taking these costs into 

account, may lead to an underestimate the true cost of crime. 

The criminology literature has attempted to estimate the total cost of crime for a number of 

major crime categories. Tangible costs, while more straightforward, nonetheless require a 

number of assumptions; for example, one must decide how to calculate the opportunity cost 

of the offender—that is, what he or she is sacrificing by being imprisoned--and how one 

attributes the cost of the criminal justice system over a multitude of crimes. Once an 

assumption is made to use the minimum wage as the opportunity cost, calculating lost wages 

and any taxes the offender would have paid on those wages during incarceration is 

straightforward. Intangible costs are measured in a number of ways, none of which is perfect. 
CEA • The Rate of Return to Prison Reforms 7 

Questionnaire data on victims is used to measure the loss in their mental and physical quality 

of life. Other studies use the portion of a jury award that is used to compensate for pain, 

suffering, and loss of quality of life (the amount of the award above and beyond the portion 

that is awarded to deal directly with actual measureable damages). Ultimately, these are 

estimates of a cost that is inherently difficult to measure and are likely highly dependent upon 

the individual circumstances of the crime. 

Nonetheless, using an average of these estimates from the academic literature on tangible and 

intangible costs of a wide variety of crimes (see Figure 2), combined with CEA estimates on 

actual incarceration costs, we estimate a weighted average total cost of crime of about 

$258,000 per crime.8

 Furthermore, we estimate that $96,000 of this cost is due solely to 

incarceration costs (estimated by the annual incarceration cost times the average length of 

imprisonment by crime, adjusted to present value using a 3 percent discount rate).9

 The cost 

estimate above and beyond incarceration costs captures various costs that are particular to 

the crime. For example, in homicide, a large fraction of the cost is the statistical value of a life. 

In cases of larceny, it is the actual dollar value of goods or money stolen. Figure 2 below 

illustrates the total costs of a subgroup of crime categories used to derive the weighted 

average.10 

                                                            

8

 The weights used are the probabilities that a freed Federal prisoner recidivates for a particular crime. For 

example, conditional upon recidivating, the probability that the crime is assault is 24.4 percent. We use Federal 

average costs per prisoner to value the incarceration costs but note that State and Federal costs per prisoner are 

similar. 

9

 The Vera Institute of Justice, an advocacy organization, suggests that overlooked costs such as employee 

benefits or hospital care for inmates would add an additional 13.9 percent to incarceration costs, on average. 10 There are a limited number of crime categories for which we have more complete estimates of tangible and 

intangible costs. In cases where this information is missing, we use an estimate of incarceration costs only. The 

main categories where non-incarceration costs are missing are drug trafficking and possession and weapons 

possession.   
CEA • The Rate of Return to Prison Reforms 8 

Figure 2. 2017 Average Total Costs per Crime 

(Thousands of Dollars) 

(Type of Crime)

Sources: Cohen and Piquero (2009); Heaton (2010); McCollister, French and Fang (2010); NIH Public Access (2009); National 

Corrections Reporting Program (2009); Bureau of Justice Statistics; Federal Bureau of Prisons. 

4. The Evidence Base on Prison Programs and Recidivism 

Many prisoners in the United States have access to correctional programming, 

including a broad array of interventions including substance abuse treatment, education, and 

mental health treatment. Duwe (2017) notes the literature tends to use four outcome 

measures to measure the efficacy of correctional programming provided during incarceration: 

(1) prison misconduct, or the lack of adherence to prison regulations, (2) recidivism, (3) postrelease employment, and (4) cost avoidance, or the monetary benefit that accrues through the 

prevention of crime. Of these, recidivism is the most common outcome used to assess the 

effectiveness of treatment programs. 

Based on the literature, the most successful treatment programs are those that address the 

mental health and substance abuse problems of prisoners.11 Using the treatment estimates 

                                                            

11We primarily make use of a comprehensive list of rigorous studies from Doleac (2018). In addition, we 

supplement this search with research papers from The National Justice Institute’s (NIJ) Crimesolutions.gov 

database as a particularly useful catalog of studies that is designed to be a single, credible, online resource to 

0

100

200

300

Homicide Rape Robbery Serious

Assault

Burgulary Larceny Motor

Vehicle

Theft

Arson

Costs of Crime Incarceration Costs

Incarceration Cost Average Total Cost Average

10,000

10,100

10,200
CEA • The Rate of Return to Prison Reforms 9 

from the literature, we conclude that these programs reduce recidivism by approximately 17 

to 21 percent. Educational programs, while common, have shown inconclusive results and 

require better designed studies to adequately evaluate expected outcomes. In line with the 

principles of the Administration’s push for evidence-based intervention, there is need for 

additional work to improve evaluation methodologies in this area.12 Any prison reform agenda 

should include efforts to (a) base reforms on the best data available and (b) consistently 

measure results. For example, the Report of the Commission on Evidence-Based Policymaking 

recommends that up to 1 percent of program administration resources be set aside to support 

evidence-building activities including data collection, program evaluation, and policy-relevant 

research (CEP 2017). 

In the analysis that follows we group the literature into two broad categories: (1) rigorous 

program evaluations, whether or not they find positive recidivism effects and (2) programs for 

which the evidence base is incomplete or poorly designed. By “rigorous’’ we mean those 

studies with a solid empirical design—typically randomized control trials (RCTs)—and those 

that have addressed sample selection issues. The random selection into treatment and control 

groups is often quite important in these studies where otherwise self-selection into treatment 

would provide highly biased findings. For example, an offender who is motivated to change 

his or her life is more likely to volunteer for treatment and less likely to engage in crime in the 

future. Thus, we, as researchers, may overstate the importance of the treatment because what 

we are actually capturing is the impact of the treatment plus the impact of the offender’s 

motivation. Randomization into treatment, along with careful attention to attrition, helps to 

minimize such biases. We also focus on more recent studies (all studies post-2010), though 

supplement these studies with some earlier literature when relevant and helpful to fill out thin 

areas of well-done studies. Finally, we restrict our review to people with extant criminal records 

(and not initial crime prevention). 

A. Rigorous Evaluations of Mental Health and Substance Abuse Programs 

                                                            

inform practitioners and policymakers about what works, what doesn’t, and what’s promising in criminal justice, 

juvenile justice, and crime victim services. The programs that NIJ analyzes are identified and selected through a 

continual, comprehensive search of the literature. This includes searches through relevant databases, peerreviewed journals, other publications, federal agencies’ websites (such as NIJ and the Office of Juvenile Justice 

and Delinquency Prevention (OJJDP)), and program nominations from the field. Programs are prioritized by 

Senior Researchers based on several factors, such as study design, year of publication, and type of program. 

Prioritized programs are submitted to NIJ and OJJDP program officers for final approval. There is a regular 

updating process of programs included in Crime Solutions to incorporate any significant new research. 

12 This is also consistent with the Ryan‐Murray Foundations for Evidence‐Based Policymaking Act that calls for a 

more transparent and efficient data system that will allow various Federal agencies to better judge the 

effectiveness of Federal programs. 
CEA • The Rate of Return to Prison Reforms 10 

In the sections below, we review the rigorous studies that evaluate mental health and 

substance abuse programs. To date, some of the rigorous studies have examined the 

implementation of these programs on youth up to age 25, with fewer studies completed on 

adults. Unlike State facilities, Federal prisons hold very few juvenile inmates, however, and for 

the purposes of calculating an ROI, we assume a similar recidivism reduction among Federal 

inmates targeted for treatment. To the extent that Federal actions on prison reform also spur 

additional investments in mental health reform by States, these returns are relevant for those 

investments as well. 

i. Mental Health Programs 

Mental health programs, specifically cognitive behavioral therapy (CBT) and multisystemic 

therapy (MST) programs, have been shown to be effective in several rigorous evaluations, most 

definitively for juvenile participants. CBT programs use psychotherapy to change individuals’ 

behavior by modifying dysfunctional patterns of behavior and thought. The goal of treatment 

is to help individuals internalize these new ways of thinking and apply them to a variety of 

different circumstances to make it easier for them to re-enter society. CBT can be used for 

substance abuse, mental health, and other prison-specific programming needs, as it is used to 

treat disorders including anxiety, depression, and obsessive compulsive disorder. Duwe (2017), 

in reviewing research on CBT, finds that this therapy technique has been shown to reduce 

recidivism by 20 to 30 percent, and CBT programs are potentially the most effective method to 

reduce recidivism. But these treatments can also be quite expensive. In the subsequent 

paragraphs we discuss the findings from rigorous studies on the effectiveness of CBT and other 

mental health treatments. 

Burraston et al (2016) examine whether recidivism was reduced among juvenile offenders on 

probation following a mental health treatment program that used cell phone technology in 

CBT training sessions. Controlling for gender, prior arrests, and risk scores, results show that 

the treatment group had a 51 percent significantly lower chance of re-arrest within the first 

year. Heller et al. (2016) carried out three large-scale randomized controlled trials (RCTs) on 

youth in Chicago to analyze the effects of a mental health program that offered participants a 

chance to perform rational self-analysis. The treatment was found to significantly reduce 

recidivism by 21 percent. Barnes et al. (2017) examine the effects of a CBT treatment program 

in a probation correctional environment for adult offenders in Philadelphia. Using an RCT to 

evaluate the effects of a classroom program designed by experienced psychologists, but 

conducted by probation officers, the authors find that the treatment group was significantly 

less likely to recidivate by 17 percent. The results were only significant for nonviolent crimes, 

however. Finally, De Vries et al. (2018) examine the effects of the New Perspectives program, 

an intensive community-based program for youth offenders. They use a randomized control 

trial to find an insignificant effect of the program on recidivism. 
CEA • The Rate of Return to Prison Reforms 11 

Multi-systemic therapy (MST), an alternative mode of treatment to CBT, is generally more costeffective and involves the families and communities of targeted individuals. Butler et al. (2011) 

analyze the effects of MST treatments where trained MST professionals were recruited to visit 

the families of juvenile offenders several times each week and were always available on call. In 

a randomized controlled trial setting, the authors find that the treatment group was 

significantly less likely to recidivate by 70 percent. Sawyer and Borduin (2011) examine the 

long-run impact of MST on recidivism, using a sample of 176 juvenile offenders who were 

randomly assigned to MST treatment or individual therapy. The program resulted in a 36 

percent statistically significant reduction in recidivism for the treatment group. In contrast to 

these successful approaches, Olsson (2008) finds no statistical difference between a more 

expensive MST therapy and the baseline standard therapy among juvenile offenders in 

Sweden. Taking these findings all together, CEA estimates a median treatment effect of 21 

percent for programs addressing mental health problems during incarceration. 

For comparison, CEA notes that as part of its benefit-cost analysis of Washington state 

programs in criminal justice, education, and other policy areas, the Washington Institute of 

Public Policy (WSIPP) has conducted a meta-analysis of adult CBT programs based on a 

literature review through December 2016. WSIPP’s estimated unadjusted effect size of program 

participation on crime (recidivism) is -.147, corresponding to a reduction in the recidivism rate 

of 17.1 percent. After adjusting for the methodological quality and other characteristics of the 

underlying studies, WSIPP’s adjusted effect size falls (in absolute value) to -.109, implying a 

recidivism reduction of 12.9 percent. In addition, WSIPP’s analysis of MST programs serving 

juveniles and their families suggests that program participation results in an (adjusted) 11.4 

percent reduction in recidivism. 

ii. Substance Abuse Programs 

Drug-related offenses constitute approximately half of overall crimes at the Federal level in the 

United States. It is estimated that 60 percent of prisoners have alcohol or drug related 

problems. Only 24 percent of Federal prisoners, however, are formally diagnosed with a 

substance abuse disorder; all of these diagnosed prisoners receive substance abuse treatment 

while incarcerated. At the State level, fewer than 10 percent of prisoners receive drug 

treatment even though more than half of prisoners meet the criteria for substance abuse 

(Zarkin et al. 2012). Substance abuse treatment participants engage in specific services or 

behavioral change techniques, such as aversion therapy, drug testing, drug counseling, or 

relapse-prevention training. 

In early studies, Wexler et al. (1999a, 1999b) evaluate the effectiveness of the Amity In-Prison 

Therapeutic Community, a program that provides substance abuse treatments for male 
CEA • The Rate of Return to Prison Reforms 12 

offenders. The authors use randomly assigned treatment and control groups and find that the 

treatment group was significantly less likely to recidivate by around 32 and 35 percent over 

follow-up periods of a year and two years respectively, but this difference became statistically 

insignificant by three years post release. A 2016 revision in regulations by the Bureau of Prisons 

(BOP) to use therapeutic community treatments for the Residential Drug Abuse Treatment 

Program (RDAP) was based on similar research by Wexler et al (1990). The BOP estimates RDAP 

leads to a reduction in recidivism by males and females of 16 and 18 percent respectively (FBOP 

2000). 

Sacks et al. (2012a) evaluate the efficacy of a therapeutic community program targeted at male 

offenders who had issues with both drug abuse and mental illness. Using a randomized 

controlled trial, results indicate that the modified therapeutic community decreased 

recidivism rates by 50 percent. Sacks et al. (2012b) analyze the impact of a therapeutic 

community program on the recidivism tendencies of female offenders with substance abuse 

disorders. The authors conducted a longitudinal study at the Denver Women’s Correctional 

Facility. The authors find that the therapeutic community program significantly decreased 

recidivism by 19 percent for the individuals in the study. 

Inciardi et al. (2004) evaluated the effectiveness of the CREST program, a multi-stage substance 

abuse treatment program implemented in Delaware prisons. Key findings for this program 

include that it significantly reduced re-arrest at 42 and 60 months post-release by 

approximately 70 and 60 percent, respectively. A more recent summary of the rigorous studies 

on substance abuse programs by the Washington State Institute for Public Policy (WSIPP 2018) 

estimates a 12 percent reduction in recidivism for inpatient or intensive outpatient drug 

treatment. Kilmer et al. (2013) evaluates the effectiveness of South Dakota’s 24/7 Sobriety 

Project that made twice-a-day breathalyzer tests a requirement for bail eligibility for 

individuals who had been re-arrested for driving while under the influence of alcohol. Using a 

cross sectional data from South Dakota counties, the authors find that the program resulted in 

a statistically significant reduction in recidivism of 12 percent for repeat DUI arrests. 

Ayoub and Pooler (2015) examined the impact of the Harlem Parole Reentry Court engagement 

program on recidivism. Using a randomized controlled trial design, the program resulted in a 

statistically significant reduction in revocation (the failure to comply with a condition of 

probation) of 45 percent for the treatment group within 18 months of release. Finally, Hawken 

and Kleiman (2011) analyzed the effects of the Washington Intensive Supervision Program, a 

project designed to determine whether the principles of effective community supervision 

reduced recidivism. Using a randomized controlled trial, their results demonstrate a 

statistically significant result of a decrease in recidivism of 64 percent in the 6 months following 

release. 
CEA • The Rate of Return to Prison Reforms 13 

There are some studies that have shown no impact on recidivism. For example, Grommon et 

al. (2013) examine the effects of a drug treatment program with appropriate punishment based 

on the results from drug tests taken at random times. The authors use a randomized control 

trial, which requires frequent drug-testing for both groups and is focused on parolees who 

return to urban locations. Their results show no significant difference in recidivism between 

the control and treatment groups 18 months post-release. In addition, O’Connell et al. (2016) 

evaluate the impact of a program which incorporates principles of deterrence, graduated 

sanctions, and coerced abstinence on recidivism rates for 400 high-risk parolees. Using a 

randomized controlled trial, the authors find no statistically significant reduction in recidivism 

for program participants. 

Another example is particular substance abuse treatments. Cook et al. (2015) evaluates the 

impact of so-called wrap-around, reach-in service programs, multi-faceted programs that aim 

to address a variety of needs after release such as housing, employment and substance abuse, 

on recidivism rates. Using an RCT research design with a sample of 236 high-risk offenders in 

Milwaukee, these programs yield minimal evidence of causing a significant decrease in reincarceration. Programs that use treatment such as intensive management services have also 

not succeeded in reducing recidivism. Scott and Dennis (2012) analyzed the effects of the Cook 

County, Illinois Recovery Management Checkup Program, an intensive management program 

focused on assisting adult female participants with substance abuse disorders. Using an RCT 

research design, the authors found no effects at 90 days post-release. The program was not 

effective in reducing recidivism. 

Taken together, CEA estimates a median treatment effect from substance abuse programs of 

17 percent. In comparison, WSIPP has also analyzed programs intended to address substance 

abuse problems. Three programs in particular seem most relevant in the current context. The 

first, which WSIPP terms “therapeutic communities (during incarceration) for individuals with 

substance use disorders,” implies a 10.6 percent reduction in recidivism based on WSIPP’s 

estimated adjusted effect size. The other programs provide drug treatment services during 

incarceration. Programs providing inpatient or intensive outpatient services reduce recidivism 

by an estimated 14.4 percent (adjusted), while those providing outpatient or non-intensive 

treatments reduce recidivism by an estimated 11.6 percent (adjusted). 

B. Programs with an Inadequate Evidence Base

In this section, we discuss the adult population studies that are older, have weaker empirical 

designs, or point toward inconclusive evidence. We focus on educational programs as the 

broad evidence base of the efficacy of these programs is lacking. The criminology literature 

contains thousands of studies on numerous treatments, of which reviewing all of them is 

beyond the scope of this report. We do not aim to cover all of the studies that do not meet the 

requirements to be considered rigorous. Educational programming, in particular, is in need of 
CEA • The Rate of Return to Prison Reforms 14 

stronger empirical methodologies. The empirical studies documented here should be 

interpreted with caution due to selection biases and other issues with evaluation designs. 

As more than 40 percent of jail inmates have an education level of less than high school and 

almost a fifth are estimated to suffer from some type of learning disability, the purpose of initial 

education treatments is to help prisoners approach high school level aptitude (Brazzell et al. 

2009). Approximately 16,000 inmates are currently enrolled in GED programs in the Federal 

system, but the wait list for this programming is equally sized. More advanced education 

programs are also available, and inmates may be afforded the opportunity to continue learning 

through secondary and post-secondary education programs or to participate in vocational 

education programs where inmates can learn career-related skills (Dick et al. 2016). 

Early studies from the 1990s often showed positive results regarding the impact of education 

programming on recidivism, but these findings are subject to methodological concerns, in 

addition to being quite dated by this point.13 More recent studies by Cho and Tyler (2013) and 

Duwe and Clark (2014) find that education programming does not have a significant effect on 

recidivism but these still face many of the methodological issues of the earlier literature. One 

exception to the previously mentioned studies is Lattimore et al. (1988, 1990). The authors 

used a random assignment experimental design to measure the impact of basic vocational 

educational programming and finds that the experimental group subjects were marginally 

significantly less likely to be arrested than control group subjects. This study is, however, 

three decades old, and we know of no other rigorous educational programming study since 

its publication. What makes educational programming harder to evaluate than other types of 

programming surveyed above, is the fact that prison systems may be statutorily required to 

provide certain educational programming, such as GED classes. Therefore, the inability to 

deny these programs to inmates often hinders any sort of RCT. 

WSIPP figures imply recidivism reduction rates of 13.4% (basic), 19.2% (vocational), and 25.4% 

(post-secondary), based on adjusted effect sizes, but the research studies on which these 

estimates are based are quite dated as well. 

Thus, even though the current evidence base is lacking to evaluate education programs, 

education is, perhaps, the one program for which a great evidence base exists outside of 

prison. Since Becker (1964), economists have studied the quantitative economic returns to 

human capital investments outside prisons. They have generally found traditionally measured 

investment returns, using tuition and foregone earnings as the costs and increased wages as 

the benefits, to be around 10-12 percent per year of schooling (e.g., Lochner and Moretti 2004, 

                                                            

13Aos et al (2006), in reviewing these studies, report that basic education programs reduce recidivism by around 

5 percent, and that vocational educational programs reduce recidivism by 12 percent. Three out of the five 

studies are from 1995 or years prior. 
CEA • The Rate of Return to Prison Reforms 15 

and Harmon 2011). Adding other benefits to education, such as the improved health from 

greater education, raises those returns further. Another dimension outside traditionally 

measured returns is that legal earnings rise relative to illegal ones, which reduces incentives 

for illegal activities and crimes (Agan and Makowsky 2018). In addition, this literature suggests 

that an additional year of schooling for non-prisoners reduces the probability of eventual 

incarceration by 10 to 12 percent (Lochner and Moretti 2004). 

Finally, in addition to the discussed social benefits of prison reform to non-prisoners facing less 

crime and lower tax-burdens for prison costs, we emphasize that education likely carries 

private returns for prisoners themselves. In general, the economic returns to non-prison 

education are positive and significant as discussed above. The economic returns to GED 

completion are perhaps less clear, and for the non-inmate population, the literature suggests 

the return is at best slightly positive and often close to zero.14 (See Heckman and LaFontaine, 

2006; Jepsen, Mueser and Troske, 2016; and Heckman, Humphries and Mader, 2011.) However, 

holding other factors constant, the private individual returns to prison education may be larger 

than those of non-prison education. This is because the private costs to a prisoner of a prison 

education, such as foregone earnings while being educated, are essentially zero. With close to 

zero traditionally measured private costs of an education, traditionally measured private 

returns to prison-education may be large relative to non-prison education. We do not attempt 

to value these additional private benefits due to lack of sufficient evidence. 

5. Estimating the Returns to Prison Reform Investments 

As mentioned above, based on the literatures on mental health and substance abuse 

programs, we assume median recidivism reduction rates of 21 and 17 percent, 

respectively. We arrive at these numbers by taking the median treatment effect from the 

rigorous studies described in the previous sections.15 As discussed, different studies of different 

programs produce a range of estimates, but CEA believes these figures are reasonable 

benchmarks, as they represent realized impacts from participation in the best programs 

available to address mental health and substance abuse problems. Related estimates by 

WSIPP are only somewhat lower than these medians of 21 and 17 percent, respectively. Table 

A1 (Appendix) reports estimated recidivism reductions from several programs as analyzed by 

WSIPP as part of its benefit-cost analysis for the state of Washington. For example, as discussed 

above, participation in CBT would be expected to reduce the recidivism rate by 12.9 (17.1) 

percent based on the program’s adjusted (unadjusted) effect size. Similarly, inpatient or 

                                                            

14 We note that the return to a GED may well include reduced criminality and incarceration probabilities. 15 We exclude the one outlier of 70%. 
CEA • The Rate of Return to Prison Reforms 16 

intensive outpatient drug treatment during incarceration would be expected to reduce 

recidivism by 14.4 (17.5) percent based on adjusted (unadjusted) effect size. 

While CEA’s assumed impact effects may seem large, recall the important statistic to consider 

from a policy perspective is the ROI. Many programs, particularly in mental health are 

expensive and so it is not obvious that the benefit from reduced recidivism is sufficient to offset 

the cost. The ROI to mental health treatments is lower than that for other programs precisely 

because the costs of administering mental health programs are relatively higher.16 

Recidivism programs are investments, as they involve upfront spending for the purpose of a 

larger future gain. It is worth noting that some of this programming is provided by 

nongovernmental entities, such as religious groups, nonprofits, and corporations and some of 

the programming may occur after release from prison. To estimate the returns to prison reform 

investments, we estimate a per-prisoner public cost of recidivism, incorporating both the costs 

of newly committed crimes and the public costs (State and Federal) of incarceration for those 

who return to prison. These costs are spread out over the years after being released so that 

adding them up over time into a present value over those years is necessary. Figure 3 contains 

the cost savings from crimes for substance abuse (in blue) and mental health programs (in red) 

for each dollar spent on these programs. The costs of crime fall in all years shown in the Figure, 

with the biggest reductions in the early years when recidivism probabilities are highest. 

 

                                                            

16There is substantial variation in program costs that are highly dependent upon the scope of intervention.  From 

Aos and Drake (2013) we estimate a mean cost (in 2017 dollars) for mental health and substance abuse programs 

of $8,600 and $1,950, respectively.   
CEA • The Rate of Return to Prison Reforms 17 

Figure 3: Averaged Cost of Crime per Dollar Spent on Substance Abuse and Mental Health 

Programs by Year, Return on Investment. 

(Return per Dollar Spent) 

(Years since Release) 

Source: CEA calculations. 

The difference in the present value of total costs with and without prison reform is the gross 

benefit of prison reform investments. Dividing by estimated intervention costs, we derive a 

total return to prison reform investment, hereafter prison reform return on investment or ROI. 

One should think of these measures as “per-capita”—that is as lowering the predicted 

probability of an inmate who receives substance abuse treatment (if applicable) by 17 percent 

or mental health treatment (if applicable) by 21 percent. Again, we note that some potential 

benefits of prison reform may remain unvalued in our methodology. We further note that the 

estimates in this policy brief apply to current in-prison programs offered by the BOP, as well as 

any new spending that might be put aside for these particular programs. We estimate the net 

present value of the returns to prison reforms for mental health and substance abuse 

treatments in Figure 4. These calculations use a discount rate of 3 percent (CEA 2017) and a 21 

percent recidivism reduction for mental health and 17 percent for substance abuse treatment. 

We compute ROIs for the two treatment types explored in this report and offer a break-even 

calculation for educational programing. Our ROI estimates for mental health and substance 

abuse treatments are $1.47 and $5.27, respectively. Costs of crime savings are $0.92 for mental 

health treatments and $3.31 for substance abuse treatments. Estimated reductions in 

$0.00

$0.20

$0.40

$0.60

$0.80

$1.00

$1.20

$1.40

$1.60

$1.80

$2.00

12345678

Substance Abuse Mental Health
CEA • The Rate of Return to Prison Reforms 18 

incarceration expenditures are $0.55 for mental health treatments and $1.96 per taxpayer 

dollar spent on substance abuse treatments. 

Figure 4: Estimated Returns per Dollar Invested in Prison Reform, in Net Present Value 

Terms 

(Return per Dollar Spent) 

 (Type of Treatment) 

Source: CEA calculations. 

Based on our calculations, we estimate that both mental health and drug treatments have the 

potential to reduce combined Federal and State budget expenditures on incarceration. If 

spending on these programs were to come from a reallocation of current funds, for example by 

reassessing the effectiveness of current programs and replacing those that have not been 

shown to generate returns, cost reductions could be achieved with fewer budgetary outlays, 

resulting in higher returns. We also find that educational programing needs only a modest 

impact on recidivism rates in order to be cost effective.

Our analysis provides an overall assessment of the returns to prison reform investments by 

relying on representative averages for the U.S. prison population to calculate the returns. For 

comparison, CEA notes that WSIPP (2018) estimates benefit-cost ratios of 6.33 for CBT, 5.03 for 

therapeutic communities during incarceration, 10.18 for inpatient or intensive outpatient drug 

treatment, and 14.10 for outpatient or non-intensive drug treatment programs. The returns on 

drug treatment programs are far higher than those on mental health programs—not because 

program impacts are so different but because the costs of program delivery are so much 

greater for mental health programs such as CBT. We also note that CEA’s estimated returns are 

lower than WSIPP’s because the benefit-cost ratios in these studies typically capture the gain 

$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

Drug Treatment Mental Health

Costs of Crime Averted per Dollar Spent Incarceration Savings per Dollar Spent

$5.27

$1.47
CEA • The Rate of Return to Prison Reforms 19 

in benefits associated with increases in post-release productivity, in addition to the crime 

reducing effects and incarceration cost savings documented in Figure 4. Further, those returns 

also reflect adjustments made for research study quality, decay of impacts over time, and 

dead-weight losses associated with raising funds to pay for the programs. 

It is useful to look at our estimates from a different but complementary perspective. We have, 

until now, estimated the ROI for a particular reduction in recidivism based on our review of 

the literature. Given the selection and measurement problems with the educational 

programing studies described above, rather than calculate an ROI based upon the empirical 

studies, another approach is to flip the equation and ask: for a given ROI, what would be the 

required reduction in recidivism that would reach that particular ROI goal? For example, 

suppose we were to calculate a “break-even ROI,” that is, for every dollar invested in 

correctional programs, the total cost of crime would fall by one dollar. The required 

reduction in recidivism for education programs would be around 2 percent. We arrive at this 

number by using cost estimates for standard educational programs and the cost of crime 

estimates from Section 3.17 Similar calculations for drug and mental health treatments 

would be 3.2 and 14.5 percent respectively (below their estimated impacts in reducing 

recidivism by 17 and 21 percent, respectively). Thus, even with the uncertainty surrounding 

the estimated treatment effects for educational programs in the literature, these programs 

could still provide positive results even with a very modest impact on recidivism. We note, 

nonetheless, that these break-even statistics depend significantly on our cost-of-crime 

estimates, which are averages across a wide variety of crimes from homicide to arson. More 

targeted values of this cost that result in higher (lower) values lower (raise) the break-even 

statistic. 

6. Conclusion 

Crime imposes a significant burden on American well-being and tax-financed resources. 

Rigorous and evidence-based prison programs have been proposed to break the crime cycle, 

reducing future criminal activity and lowering incarceration expenditures by facilitating more 

successful re-entry upon prison release. In this policy brief, CEA provided methods and 

estimates assessing the rate of return on prison reforms aimed at lowering recidivism. 

Although programs vary in efficacy, CEA finds that there is an empirical evidence base to 

support programs that focus on the prisoner’s mental health or substance abuse to prevent 

future crime. Selected programs may reduce the cost of crime by about $0.92 to $3.31 per 

taxpayer dollar spent on prison reform and long-run incarceration costs by $0.55 to $1.96, for 

                                                            

17 Estimated education costs are based on Aos and Drake (2013) and updated to 2017 dollars. The costs reflect 

the average cost of correctional education in Washington State for both basic/post-secondary programs as well 

as vocational education. 
CEA • The Rate of Return to Prison Reforms 20 

a total return of $1.47 to $5.27 dollar spent on prison reform. Despite these positive returns, 

there are program types, most notably in education, where the evidence base is more 

incomplete and therefore rate of returns more uncertain. Given this uncertainty CEA estimates 

how much recidivism would have to be reduced in order for the programs to break-even given 

their costs. CEA estimates a break-even effect of around 2 percent. Given the Administration’s 

evaluation and evidence principles outlined above, in order to determine whether programs, 

both new and old, achieve such target effects, they would need to be rigorously evaluated and 

targeted to meet the specific needs of prisoners using validated assessment tools. 

There are several limitations of the reviewed literature on the effectiveness of programs and 

differences in studies that should be noted in interpreting our estimates. First, in many of the 

studies described in this report, treatments were deliberately targeted towards prisoners with 

the highest expected return. Some interventions target prisoners who are already believed to 

be medium to low risk, that is, those with an already medium to low probability of re-offending 

(Lowenkamp and Latessa, 2004). Studies on low risk inmates often find a high reduction in 

recidivism while those that study high risk inmates find low rates since the respective samples 

behave differently. Accordingly, a reduction in recidivism rates from these programs does not 

imply the same reduction in overall recidivism for a released cohort of Federal prisoners as 

there may be prisoners of different risk levels for whom no available intervention is 

appropriate. Reform initiatives will need to carefully consider the best targeting of these 

programs and their effectiveness. 

Second, all of the studies that we cover are limited in the time period in which the released 

inmate is followed. When we conclude that a particular program is effective in reducing 

recidivism, it generally means in the few years after the inmate is released. It would be 

incorrect to conclude from these studies that recidivism never occurs over the lifetime of a 

released inmate. In some cases it may simply be delayed. Most recidivism occurs in the 5 years 

after release, with rates decreasing over time. For simplicity, we cap our analysis at 8 years 

post-release and assume no recidivism past this point. This may lead to a slight underestimate 

of the cost savings, making our estimates slightly more conservative. 

Third, the issue of scalability is also important. There have been programs that work in small, 

particular settings but when an attempt is made to scale up, the program may not provide the 

same positive results that were experienced in the small scale setting. Thus, it is important to 

remember that there are a number of well-done studies that show success in reducing postrelease recidivism, but it is not obvious that if we were to take these programs and attempt to 

replicate them on a national level would we obtain the same magnitude reduction in 

recidivism. 

Fourth, many mental health programs are post-release community programs that tend to 

show higher treatment effects than those in prison. The mental health studies that we review 
CEA • The Rate of Return to Prison Reforms 21 

are primarily focused on treatment post-prison. The WSIPP comparison studies that we 

reference focus exclusively on in-prison studies, which may partially explain why the typical 

treatment effect is slightly lower than we found in our literature review. 

Lastly, due to constraints imposed by the literature, in order to evaluate the reduction in 

recidivism in the adult prisoner population, we must rely in part on measured effects for 

juveniles and those under the age of 21 due to the lack of sound studies in the adult population. 

Juveniles are defined as youth under the age of 18 by the U.S. Department of Justice. While 

initial crimes may be committed when young, recidivism may occur well into adulthood. Thus, 

by stemming the cycle of repeated recidivism while young, the social and taxpayer returns are 

potentially larger than those for older released prisoners. This being said, our analysis may 

overstate a program’s impact on the full age distribution of inmates as we apply the results 

from juvenile studies to the general population of prisoners. We acknowledge that it is not 

apparent that what may work for younger inmates necessarily works for older inmates. 

Given these findings and limitations in evaluations, CEA concludes that returns on certain 

programs for which well- designed studies exists are high, but that an increased investment in 

better evidence is needed to guide future investments into programs to reduce recidivism. 
CEA • The Rate of Return to Prison Reforms 22 

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CEA • The Rate of Return to Prison Reforms 27 

Appendix 1 

Table 1a. Estimated Percent Change in Recidivism Rate for In-Prison Treatment Programs 

Program Based on Adjusted Effect Size Based on Unadjusted Effect Size 

Cognitive behavioral therapy (CBT) for 

individuals classified as high or moderate risk -12.9% -17.1% 

Multisystemic therapy (juvenile) -11.4% -27.8% 

Therapeutic communities (during 

incarceration) for individuals with substance 

use disorders 

-10.6% -15.7% 

Inpatient or intensive outpatient drug 

treatment during incarceration -14.4% -17.5% 

Outpatient or non-intensive drug treatment 

during incarceration -11.6% -20.5% 

Source: Washington State Institute of Public Policy (2018) and related meta-analyses, CEA calculations. 
ABOUT THE COUNCIL OF ECONOMIC ADVISERS 

The Council of Economic Advisers, an agency within the Executive Office of 

the President, is charged with offering the President objective economic 

advice on the formulation of both domestic and international economic 

policy. The Council bases its recommendations and analysis on economic 

research and empirical evidence, using the best data available to support the 

President in setting our nation's economic policy. 

www.whitehouse.gov/cea 

May 2018