The main challenges to undertaking a cost-benefit analysis in the criminal justice sector - Essay Example

?Order 519972 Topic: What are the main challenges to undertaking a cost-benefit analysis in the criminal justice sector and what does cost-benefit analysis tell us about the economic efficiency of situational crime reduction? The objective of the study is to present research that defines the main challenges to undertaking a cost-benefit analysis in the criminal justice sector. Furthermore, the cost-benefit analysis will be investigated to determine what does it tell us about the economic efficiency of situational crime reduction. The reduction of crime in the national level is ‘driven by policies which emphasise partnership working between police, criminal justice authorities, local authority teams and other agencies, in order to tackle offending and impact on the causes of crime’ (I&DeA 2009). The ‘total costs of crime have been estimated at ?36.2 billion per year in England and Wales’ (I&DeA 2009). Most of these cover the monetary losses to individuals, the costs of the criminal justice system, and the wider social impacts. Crime has a direct impact on victims including direct physical health impacts and potentially serious mental health impacts. Moreover, crime may lead to negative health impacts to the community. ‘The direct effects of violent crime on physical health are obvious. It is estimated that 351,000 people per year attend accident and emergency departments in England and Wales following violent assaults’ (Sivarajasingam et al 2008). Most of them will have ongoing health needs as a result of being attacked. Moreover, negative psychological effects of crime are extensive. Crime victims are susceptible to suffer from serious mental health impacts, including anxiety, depression, post-traumatic stress disorder and substance abuse disorders. Crime is costly to the economy but also the measures to reduce or prevent it. The ‘potential benefits from a more valuable response to offending can be divided into various types such as benefits to the prospective offenders enabled to follow a more constructive and engaged life path, benefits to the Government from reduced spending on the Criminal Justice System and benefits to households and the private sector from reduced victimisation rates, reduced fear of crime and lower spending on crime prevention as offending falls’ (Bowles & Pradiptyo 2005). Cost benefit analysis extends CEA(cost effectiveness analysis) by attaching monetary values to the outcomes of a program. After the cost of inputs and outcome benefits have been quantified in monetary terms, a comparison of alternate interventions can be made. For example, ‘the benefit cost ratio of 1.35:1 for a burglary prevention program indicates that for every dollar spent on the program, $1.35 of benefits is received (e.g. by the avoidance of future burglaries)’(Dossetor 2011). The ‘Home Office claims that violence against women and girls costs ?40.1 billion a year’ (Whiston 2009). This includes plans to teach children about the evils of wife-beating through “educating children and young people about healthy, non-violent relationships”. Gender bullying will also be tackled by teachers. The ‘?40.1 billion figure was cited recently in Saving Lives, Reducing Harm, & Protecting the Public which gave as its source the Pre-budget report and comprehensive spending review for 2007’ (Whiston 2009). The Home Office has carried out research to discover the true figure. One estimate published in 2005 in Economic and Social Costs of Crime against Individuals and Households, found that the ‘total burden of crime in 2003-04 was ?36.2 billion. Sexual offences and violence against the person together represented 60 per cent of this figure – just under ?22 billion. That includes offences against men as well as women.’ In September 2004, the Women and Equality Unit published a study by Sylvia Walby of the University of Leeds that ‘calculated the cost of domestic violence, including rape at ?5.7 billion, and loss to the economy of ?2.7 billion. That is much lower than either ?40.1 billion or ?22billion. The difference is accounted for by human and emotional costs, which are reckoned by Dr. Walby as ?104,300 for each assault or rape. The figure is arbitrary, and open to argument. However, if we accept it as reasonable, the total costs of domestic violence and rape against women totted up to ?13.9 billion. In these figures, the costs of rapes appear to be counted twice, once under rape and assault by penetration (37,000 cases) and once as rape (28,000) cases. Discount this and the total would be ?2.9 billion lower’. For ten years men’s action groups and lobbyists have sought support for male victims of domestic violence that has been afforded women via Women’s Aid and Refuge. They have consistently been refused, on ‘the grounds that men are a minority of domestic violence victims (10 per cent or less) and therefore didn’t qualify or justify a diversion of funds. This attitude remains unchanged in spite of the Government finally accepting British Crime Survey figures which have been telling them for years that a significantly large minority of victims, in the region of 30 percent are male.’(Whiston 2009). There is a wide variation of estimates as to the scale of the total costs of crime. In the late 90’s the Association of British Insurers (1998)’put the figure at over ?35 billion and a year’ later the Audit Commission (1999) ‘put it at ?50 billion’. The most authoritative effort to embrace the various categories and to estimate the economic and social costs of offending is that of Brand & Price (2000) whose Home Office Study put the ‘total at about ?60 billion. About one fifth of this total is represented by public spending on the criminal justice system, the remainder being met by victims of crime, business and other parts of government such as the health services’. A high proportion of individuals arrested for certain kinds of offences like theft and burglary, test positive for class A drugs. Under the UK’s Drug Interventions Programme (DIP) persons arrested for certain kinds of ‘trigger offences’ can be required to be tested for the class A drugs such as heroin, cocaine and crack. ‘Evidence reported revealing 38% of those arrested in 2006-07 for theft tested positive for heroin and/or crack cocaine’ (Bowles 2008). This figure may be an underestimate because some of those arrested were deemed unfit to be tested due to overuse. In models of the economic and social costs of drug misuse, the costs of crime play a significant role. ‘Other prominent costs of drug misuse include costs of premature death, recurrent health and social care costs, costs of impaired driving and the loss of productivity’ (Godfrey et al 2003). To make a preliminary estimate of the crime costs associated with drug misuse, analysts should establish the extent of offending associated with drug misuse. One way to do it is to take the total costs of crime and to make an estimate of the proportion accounted for by drug users. If we take theft for example, ‘then one possible way would be to use the proportion of theft arrests involving those testing positive for class A drugs as a proxy for the degree of involvement of problem drug users in theft’ (Bowles 2008). Another way, and more widely used approach is to estimate the number of drug users and to combine this with survey evidence on their offending. In Godfrey et al (2003) this is ‘done by reference to the results from a cohort study of treatment outcomes, NTORS, which tracked offending and other behavior before and after drug treatment’. Account is taken of the costs of drug possession offences and of the full range of economic and social costs of the crimes respondents’ reporter having committed. Finding a connection between offending and drug misuse is not sufficient to establish that eradication of drug misuse would contribute a cost saving equivalent to the total offending costs. ‘Drug misuse and offending may be both symptoms of some common factor, so while reducing drug misuse might contribute to a reduction in offending the impact might be weaker than expected as other adjustments are prompted. A price increase of a drug might induce a switch to alcohol or to other kinds of substances. The net result might be a reduction in offending. This offending cost is then put alongside other costs such as the costs of premature death, health service costs and productivity loss to assemble an estimate of a total cost for drug misuse’ (Bowles 2008). From the story of Peter (a prolific offender to restorative justice advocate), three things ruled his childhood: crime, drink and violence. ‘Involved in petty offending from the age of 6, moved on to burglary, robbery, car crime and drug abuse. He was kicked out of the family home whilst still at primary school, expelled from secondary school at age of 12, into drug dealing in his mid-teens and built up a “mini drugs empire”. At the age of 43, just released from jail and back on drugs, he was arrested again. But he pleaded guilty so he was offered the opportunity to meet victims of two of his recent burglaries at a restorative conference, to which he agreed. Face to face, he recounted that he had sold Ronald’s laptop for just ?25. An emotional Ronald – a doctor – told him that the laptop contained all his research notes for a book he was preparing. Now the notes were lost forever and he felt his life had been ruined. On the other part, Anthony was angry at Peter’s attempts to justify his actions’ (Restorative Solutions). Peter says, “I had never thought about all the Ronalds and Anthonys I had harmed in my life. All I had thought about was the money and the risks he has taken to get drugs. I had never thought about those I stole from as people, human beings like me. I was devastated at what a rotten person I had become. I was deeply ashamed”. Peter promised to change and get rid of the alcohol and drugs. He was sentenced to 4 years imprisonment and accepted into the drug rehabilitation wing, before being sent to an open prison. After 3 years he was released, back to the community got married and not committed any crimes or taken drugs or drunk alcohol in that period. ‘Without the restorative intervention, Peter’s life would have continued along the same path as before. He would have committed 3-4 crimes each day and over six months might well have carried out 450 burglaries, 100 personal robberies and perhaps other more serious offences’ (Restorative Solutions). The cost of the restorative conference (including administrative expenses and prison costs associated with the meeting) was ‘approximately ?800. This compares with ?1,690,000 saved from the discontinuation of Peter’s career’ (Restorative Solutions). The costs of the continuation of Peter’s criminal career over the next five years can be estimated as follows: Costs to individuals and households Net value of property stolen or damaged ?300,000 Physical and emotional impact burglaries ?291,000 Robberies ?381,000 Criminal justice system costs Police investigations and court costs Burglaries ?260,000 Robberies ?110,000 Prison ?107,000 Drug treatment in prison ?13,000 Other consequential costs: Value of lost output burglaries ?29,000 Robberies ?126,000 Health services for robbery victims ?60,000 Total ?1,690,000 ‘The UK Home Office required all programmes funded by the Crime Reduction Programme to incorporate CEA to ensure adequate assessment of the initiatives seeking funding. In addition the Home Office encourages researchers to include information on costs and benefits in their evaluations and they provided guidance to support this practice’ (Legg & Powell 2000). The ‘growing use of CBA in the criminal justice arena has been driven by the increased public demand for transparency and accountability of government-funded project. Use of CBA has been facilitated by improved data availability and techniques for quantifying the benefits and cost of intervention programs (Cohen 2000). Costs incurred by the victim are classified into two broad categories – tangible and intangible. Although ‘tangible costs including medical fees, lost wages and police and prison expenditures are seemingly easy to quantify, this is not necessarily so. There is no standard accounting system that incorporates all the cost of crime to victims’ (Cohen 2000). ‘Intangible costs include psychological and emotional costs such as the cost of pain, suffering and lost quality of life resulting from the victimization and are more subjective than tangible costs’ (Cohen et al 2004). For example, although the monetary costs of a car theft is quite high, the intangible costs are considered to be low and relatively short lived as compared to the intangible costs incurred by victims of sexual abuse which are not only painful but enduring. In determining costs, important distinction needs to be made between marginal and average costs. ‘Marginal (or variable) costs vary with each additional unit of output, in example, feeding an incarcerated individual, medical care, etc. while average costs are calculated by dividing the total costs by the total volume in a certain period of time. Therefore, average costs include both fixed and marginal costs’ (Dessetor 2011). The inclusion of large-scale capital costs such as acquiring asset or purchasing equipment, can affect the cost-benefit analysis. For example, the inclusion of large-scale capital costs to calculate the economic efficiency of a program that is implemented for a relatively short period of time could result in the costs eclipsing the benefits received in this same timeframe. ‘It is recommended spreading the capital costs over the life of the project to obtain a more accurate picture of the costs of the program’ (Welsh and Farrington 2000). The discounting of future monetary benefits is required to account for the preference for immediacy and the time value of money. ‘The time value of money describes the concept that one dollar today is worth more than one dollar tomorrow as you can invest the dollar today and earn interest on it’ (Gramlich 1990) Considerable uncertainty can arise surrounding the costs and benefits of a program due to a reliance on certain assumptions. Most of the time, ‘implementation of the program is based on an evaluation of a program which has already been implemented. However, differences between programs such as demographic differences between the offending or treatment populations, the punishment or treatment protocols, program personnel and the time periods, can result in varying outcomes’ (Cohen 2000). A change to any one of these elements could affect the effectiveness or the cost of a program. Another challenge to effectively compare alternative programs arises when the benefits of the costs of a program may not occur for a number of years. This is generally seen when an evaluated program has large upfront costs and small benefits incurred over a long period of time. Cohen (2000) observed that ‘the majority of criminal justice CBAs utilise a discount rate between two to three percent.’ Although the Home Office recommended a standard discount rate of ‘six percent in 1999 and 2000, this rate was revised to 3.5 percent as of 2010’ (Legg and Powell 2000). Here is a case study involving the closing off opportunities for crime: an evaluation of alley-gating performed by Johnson, Bowers and Hirschfield in 2004. ‘A situational crime prevention program was implemented in an effort to reduce high levels of burglars gaining access to terraced properties through back alleyways in the City of Liverpool (United Kingdom). This program involved fitting gates to alleyways at the back of terraced properties to restrict access to residents and reduce opportunities for offenders to gain entry into properties. This is a common example of target hardening, whereby upgrading of physical security measures at vulnerable households reduces their susceptibility to criminal incidence. The project was implemented over a period of three and a half years, beginning in January 2000 through to June 2003. Due to the rolling implementation schedule, Bowers et al (2004) calculated how many burglaries occurred before and after installation of the gates and how many months elapsed in these two time periods. The main source of data included police-recorded burglaries. Bowers et al (2004) used an experimental-control, pre-/post-test design by comparing the before and after burglary rates for both treatment and matched comparison areas to determine the reduction in domestic burglaries as an outcome of program intervention. The situational intervention involved the installation of hardwearing lockable gates across the alleyways at the back of the terraced properties. To examine the effectiveness of the scheme, a comparison group was established that did not have alley-gating implemented. To ensure that the comparison group was appropriate, the burglary rates in the selected comparison area were compared with the action area for the period pre-implementation. Bowers, Johnson and Hirschfield (2004) found that restriction to access via rear alleyways increased the number of burglaries for which access was gained at the front of the houses, or other entry points (tactical displacement). However, Bower and her colleagues determined that despite this displacement effect, a significant overall reduction in burglary was still achieved within the action area. A cost-benefit analysis was conducted. ‘The total cost of the intervention was estimated at ?2,094,302. This was made up of the cost of the gate installation, including the resident consultation process, and manufacture and installation of each gate. The total benefits were estimated at ?2,013,967 after three years. Benefits were calculated by estimating the number of burglaries prevented and attaching a monetary value to these avoided burglaries. The method of calculating the number of burglaries prevented involved calculating the difference between the number of burglaries expected, derived from the burglary trends in the comparison area, to the actual number observed in the action area. The number of prevented burglaries was then multiplied by the Home Office’s calculation of the average cost to society of one burglary - ?2,300’ (Bower et al 2004). ‘This cost included the criminal justice system cost and the value of goods stolen’ (Brand & Price 2000). Bower et al (2004) considers the estimation of total benefits to be conservative as other benefits in addition to burglaries avoided, were not included or monetised. Dividing total benefits by total costs produced an undesirable cost-benefit ratio of 0.96. Therefore, for each ?1 that was invested in this program, future victims of crime and taxpayers received ?0.96 in benefits from burglaries prevented. References Association of British Insurers 1998, Insurance statistics yearbook 1988-1998, London. Audit Commission 1999.Safety in numbers, promoting community safety, Audit commission publications. Bowers, KJ, Johnson, SD & Hirschfield, AFG2004, “Closing off opportunities for crime: an evaluation of alley-gating”, European journal on criminal policy and research, 10:285-308. Bowles, R2008, “Measuring the costs of drug misuse: a note”, University of York. Brand, S & Price, R2000, “The economic and social costs of crime”, Home office research study 217, London. Cohen, MA2000, “Measuring the costs and benefits of crime and justice”, Measurement and analysis of crime, Washington, DC, National Institute of Justice. Dessetor, K2011, “Cost-benefit analysis and its application to crime and prevention and criminal justice system”, Australian Institute of Criminology. “Economic and social costs of crime against individuals and households”, Home office. Godfrey, C, Eaton, G, McDougall, C & Culyer, A2003, “Economic and social costs of drug misuse”, Home office research study, 249. Gramlich, E1990, A guide to benefit cost analysis, New York, Prentice Hall. I&DeA 2009, Valuing health: Developing a business case for health improvement, Matrix evidence ltd. Legg, D & Powell, J2000, “Measuring inputs: Guidance for evaluation”, Crime reduction programme guidance note 3, London, Home Office. Restorative solutions 2010, “Restorative practice case study: Peter’s story”, available at www.restorativesolutions.org.uk/page. Sivarajasingam, V, Wells, JP, Moore, S & Shepherd, JP2008, Violence in England and wales: An accident and emergency perspective. Walby, S2004, Women and equality unit, University of Leeds. Welsh & Farrington 2000, “Correctional intervention programs and cost benefit analysis”, Criminal justice and behavior. Whiston, R & Hawkes, N2009, “Violence and the invisible sex”, Category archives: domestic violence, available at www.wordpress.com/domestic-violence. Read More