Skip Navigation

Perverse Financial Incentives in Criminal Justice

Punishment must be disentangled from revenue.

July 8, 2022

Since peak­ing at over 1.5 million people in 2009, the U.S. prison popu­la­tion has declined, but at the achingly slow pace of approx­im­ately 1 percent annu­ally. At this rate, it will take until nearly the end of the century to get back to the incar­cer­a­tion levels of the late 1980s. 

What’s the holdup? I’m going to let you in on one of the dirty little secrets of our crim­inal justice system: It pays to punish. A new Bren­nan Center report dives deeply into the perverse finan­cial incent­ives that drive excess­ive punish­ment at all levels of the system. The result is mass incar­cer­a­tion and a heavy finan­cial burden on those least able to pay. 

The examples of perverse finan­cial incent­ives are many. Some local govern­ments, for example, collect fees for acting as inter­me­di­ar­ies between the federal govern­ment and for-profit deten­tion facil­it­ies. Others build or expand their own public jails to provide over­flow space for people detained by ICE or the U.S. Marshals Service, which provide the added finan­cial boon of paying for those beds at a higher rate than what the jails receive for those incar­cer­ated by the county. 

Local govern­ments have also over­in­dulged in fines and fees, some­times build­ing budgets around them. Excess­ive finan­cial penal­ties need­lessly entangle poor people in the crim­inal justice system. Worse, unne­ces­sary inter­ac­tions between police and citizens — driven by pres­sure to raise revenue rather than improve public safety — create situ­ations in which miscom­mu­nic­a­tion or poor decision making can lead to tragedy. The most notori­ous example of “user-funded justice” came to light in the wake of the killing of Michael Brown in Ferguson, Missouri, where state law permits local govern­ments to source a shock­ing 20 percent of their revenue from fines and fees. 

Civil asset forfeit­ure, origin­ally inten­ded to strip ill-gotten gains from drug king­pins, is another prob­lem. Law enforce­ment agen­cies now seize cash, vehicles, and even homes on a mere suspi­cion that the prop­erty was connec­ted to a crime. The process has led to the appear­ance, and some­times the real­ity, of corrup­tion. An invest­ig­a­tion revealed that Minnesota’s Metro Gang Strike Force stopped and searched people who were clearly not involved in gang activ­ity and then allowed the officers’ famil­ies to borrow or buy seized tele­vi­sions, tools, appli­ances, and jet skis.

This system of perverse finan­cial incent­ives burdens people of color espe­cially heav­ily. Black and Latino people are dispro­por­tion­ately repres­en­ted in cities and towns that rely on fines and fees for revenue. Accord­ing to a 2019 study, arrests of Black and Latino people are more likely to be asso­ci­ated with increased forfeit­ure revenue than arrests of white people. 

Chas­ing revenue distracts law enforce­ment from its core mission: protect­ing the public and solv­ing crimes. A 2020 study found that an increase in the share of revenue from fines, fees, and forfeit­ures, was asso­ci­ated with decreases in clear­ance rates for both viol­ent and prop­erty crimes.

Incar­cer­a­tion and finan­cial penal­ties should not be used as solu­tions to budget short­falls of agen­cies and local govern­ments. If we are to solve the prob­lem of excess­ive punish­ment, we will have to address the role that finan­cial incent­ives play in main­tain­ing the status quo.