Consumer Choice in Illinois Prison Commissaries

• In Event: Frontiers in Criminal Justice Policy Methods: Discrimination, Incarceration Dynamics, and Consumer Choice

Abstract

I conduct the first welfare analysis of the commissary stores that operate inside of prisons. Anecdotally, prisoners are increasingly reliant on the commissary for the provision of necessities. Furthermore, more than half of the money spent in the commissary comes from contributions by friends and family. As such, policy regarding the pricing and availability of goods in the commissary has important implications for the welfare of prisoners and their loved ones. I create a novel dataset containing monthly sales information from the commissaries of every state prison in Illinois. I estimate a structural model of demand for items sold in the commissary, the only formal avenue through which prisoners can purchase items for consumption. Currently, the Department of Corrections prices commissary goods by setting a uniform 25% markup on the price paid to the wholesale supplier that provided the good. Leveraging my estimation of the demand system, I find the set of per-good markups that maximizes prisoners' welfare subject to revenue neutrality and other alternative constraints. I find that, under restrictions on the parameters of the model suggested by demand theory, only quite modest increases in welfare, equivalent to an increase of $0.15 in prisoners' monthly budgets, are possible while maintaining revenue neutrality. In the absence of those parameter restrictions, gains may climb as high as $3.32 per prisoner per month, a significant increase for consumers with average monthly budgets of about $125. I additionally find that significantly reducing prisons' revenue goals, by eliminating the 60% of the markup that is channeled outside of the prison economy, produces an increase in welfare equivalent to a budget increase of $17.36. As a portion of this increase is a simple consequence of sacrificing revenue in order to lower prices, I benchmark the counterfactual prices against uniform reductions in prices and lump-sum payments to prisoners.

Author

• Luke David Brinkman, Pennsylvania State University
  Presenting Author