I'm not quite sure what other people intend prisons for, but personally I'd be very happy if they reduced recidivism
Thus I think it makes sense to measure prison's performances based on recidivism rates of their former prisoners. Obviously there'd have to be risk adjustment(as certain types of prisoners are more likely to re-offend) but overall this would be a very useful statistic. If bonuses were given based upon downstream recidivism rates I think we'd have much better long term outcomes.
To enable this we'd need more competition between prisons, indeed were the bonuses sufficiently high we might tempt in private prisons who'd house prisoners for free (hoping for good bonuses). Indeed a solid & sensible metric like this means that we can now more easily outsource prisons to the private sector.
I got this idea from the Sydney Morning Herald / Core Economics , where Andrew Leigh came up with the idea.
cYp



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