Markets in Everything: Pay to Stay

A small number of California jails have begun to offer pay to stay programs.  These programs allow inmates in for minor crimes to "upgrade" to a private or public jail with better facilities.  Evidently the fees are profitable to the jails.  Take a look at how Santa Ana county advertises it’s hotel jail.

The Santa Ana Jail is pleased to host a full range of alternatives to
traditional incarceration.  Our offerings include weekends in jail,
non-linear jail sentences, and a variety of work release options.  Our
philosophy is designed to allow our clients (!, AT) to serve their obligations
to the court in a manner that respects them as human beings and permits
them to continue to provide for themselves and their families….

  • Programs that include 2-day or 3-day weekends with minimal impact on
    the client’s professional life.  Work on Saturday and Sunday?  No
  • Programs that permit jail sentences to be served in multiple parts.
    Perfect for clients that live out of the area or clients with frequent
    business travel.
  • Programs that permit the client to leave jail for work everyday.  We
    have helped everyone from 9 to 5 business people to oil-rig workers, so
    no work schedule is out of the question.

The Santa Ana Jail is the
most modern and comfortable facility in the region.  Our housing areas
are a world away from cement and steel bars….

Most clients can be approved immediately, over the phone.  We can also provide same-day acceptance letters for the court.

I have mixed feelings about these programs.  On the one hand, someone has to pay for the jails and who better than the inmates?  And note that to make an inmate-pays program effective you have to give them an incentive to pay.

But on the other hand the profit-maximizing strategy for a monopolist with different quality levels of service is pretty scary in this context.  A profit maximizer will reduce the quality level of the lowest class service – perhaps even spending money (!) to make the quality level lower – in order to push people to pay for the higher quality.  (For more on the theory, see Hal Varian’s elegant explanation.)

On the other hand (I know, I know, three hands) California’s prison system is already so overcrowded, violent and dysfunctional that one federal judge referred to medical care in the CA system as "outright depravity," thus we may already be close to the lowest quality level.  See this classic MR post for an expert’s take on the incentives of private and public prisons.

More on pay-to-stay at a Michigan Law Review Symposium.  Hat tip to Timothy Taylor at the Journal of Economic Perspectives.


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