After furiously binge-streaming all 13 episodes of "Orange Is the New Black," the Netflix comic drama about a former Connecticut debutante serving a 15-month jail sentence for laundering drug money, I devoured, equally eagerly, the book from which it was adapted. Then I took my obsession to what some might consider the extreme: I attended the American Correction Association's 143rd Congress of Correction outside Washington.
Illustration by Jasper Rietman
Deep thoughts this week:
1. The prison economy has conflicting incentives.
2. But the biggest problem is who makes the decisions.
3. And that is true with many industries outside jail, too.
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I was compelled by a scene from both the show and the book that played over and over in my head. While in prison, the protagonist, Piper Kerman (Chapman on the show), desperately wanted to buy shower shoes to avoid bathroom mold and a radio to play while jogging. Yet it took weeks for the bureau of prisons to process the check that allowed her to buy anything at the commissary and months before the radio was even in stock. This is not the greatest of prison problems, sure, but it raises a surprisingly complex economic question: Why do prisons and other government agencies occasionally not follow basic economic incentives? Considering budget shortfalls, shouldn't they want to sell whatever they possibly can?
The prison-commissary business is a strange corner of the retail market. In roughly half of prisons, the commissary is operated by a private contractor. This means that while the prisoner may be the end-user who hands her money over for shower shoes or a radio, it's the prison staff (the warden or the purchasing department, perhaps) that decides which commissary company will be on premises and what products prisoners can choose from. Ken Johnson, a director of operations for the Trinity Services Group, put it too me bluntly: "The institution is our customer, not the prisoner."
Partly as a result, prisons must follow contradictory incentives. Many want the money that's generated by a well-stocked commissary operation. It also functions as a "behavior-modification tool," one official told me, that can keep inmates "fat and happy" and can be used as leverage to discourage inmate infractions. On the other hand, prisons must restrict what can be sold. Too much junk food can invite vermin, and unrestricted shopping could be construed as indulgent. (Prisons typically limit inmates' purchasing power; I heard restrictions ranging from $40 to $200 a week.) Also, nothing can be sold with alcohol in it, which means hand sanitizers and a lot of mouthwashes and shampoos are banned. (Many also outlaw fresh fruit, which can be turned into prison hooch.) And, of course, many items could be turned into a weapon. One company at the convention, OraLine, offers "secure" oral-care products, like soft, bendable toothbrushes. Chewing gum and even Gummi Bears are often banned, too, because they can be used to plug up locks.
Every commissary operation balances these issues in its own way. Sandra Amoia, the superintendent of Groveland Correctional Facility in upstate New York, explained that the state's policy is to run the commissary with a paid staff and to sell goods at cost. As a result, her prison loses money. Tony Wilkes, chief of corrections for Davidson County, Tenn., told me that he didn't want to make money off the prisoners. Mark Flowers, director of prisons for Colorado, on the other hand, told me prison-commissary profits are quite useful and finance a host of inmate-welfare programs.
As I listened to wardens explain their incentives, I kept feeling that there was something oddly familiar. Prison commissaries are simply one extreme example of an economic arrangement that I think of as the third-party decider. There are lots of businesses in which the person selecting a product or service is not the person who will actually use it. And these are often the more frustrating parts of our economy. Employees may be the end-users of 401(k) plans and health-insurance policies, but corporate human-resource managers are often the ones who decide which company — Fidelity, Vanguard, Charles Schwab — is able to offer those plans to employees. Years ago, I came across the materials that a few 401(k) companies used to market their services, and I was surprised by how much more space was devoted to how the providers could make life easier for the H.R. people who had to file all the paperwork than to the details that 401(k) end-users would actually care about, like the expenses that the funds charge.
Adam Davidson is co-founder of NPR's "Planet Money," a podcast and blog.
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