The Economics of Capital Punishment

The lethal injection room in Florida State Prison. (Wikipedia)

The use of capital punishment is dwindling in the United States as the general consensus moves against the use of the death penalty. Opinions on capital punishment are based on a number of factors, ranging from ethical and moral considerations to practical ones – yet the economics of capital punishment often plays a role. With economic thought and economic considerations frequently dominating government policy, perhaps more weight should be attached to the economic implications of capital punishment.

The Financial Costs

Opponents of the death penalty often cite the considerable costs involved. Due to its extreme and fatal nature, the process of sentencing and holding criminals in a capital case is much lengthier, and therefore expensive, than in a regular criminal prosecution. Furthermore, with those convicted regularly appealing such convictions, the process is prolonged further, racking up even more costs. Moreover, because a life is on the line the death penalty process is more complicated: special precautions are taken to limit the possibility of mistakes. Inevitably, these extra measures incur extra costs. Then when a defendant is found guilty and charged and sentenced to death, they are incarcerated on the infamous death row. Over the long term, this type of incarceration costs millions of dollars more than the cost of life imprisonment in a regular prison. For instance, in the State of North Carolina inmates on death row have cost the state over one billion dollars more than inmates not on death row since 1976.

while the final execution costs may be the cheapest part of the process, it can still amount to a substantial cost

The cost of the execution itself must also be considered. In comparison to the massive legal and imprisonment costs, the execution is actually relatively cheap. The drugs used for lethal injection executions only cost about $168.03. However, the cost of such ‘death drugs’ has risen 15-fold since 2010 and there is nothing to suggest that this ballooning in price will not continue. Other methods can be more expensive. In 2010 the execution of Ronnie Gardner by firing squad cost the state of Utah $165,000, $25,000 of which went on materials used in the execution, including the chair to which he was strapped and the jumpsuit he wore. Clearly then, while the final execution costs may be the cheapest part of the process, it can still amount to a substantial cost. This is summed up by Richard Dieter, executive director of the Death Penalty Information Centre, a think-tank, who said: “even though it is a small amount in the big scheme of things, it represents one more spiralling expense that makes the death penalty less reliable and more costly”.

The Opportunity Costs

Inevitably the financial burden of capital punishment has far reaching implications for the wider economy. The costs are exclusively funded by taxation, which places the staggering cost of capital cases onto taxpayers. Because the death penalty is such a drain on public resources, it will inevitably result in either higher taxes, which leaves less disposable income for citizens or cuts to public infrastructure spending, which may lead to roads falling into disrepair and education standards slipping.

Economic efficiency is achieved when resources are allocated to uses that create the most value. Society may incur additional costs as a result of enforcement of the death penalty. Inmates often work while they are in prison. Inmates not only help with some tasks at correctional facilities, they also work for the state in various capacities. While it’s difficult to determine the value added by prison inmates, some output may be foregone when prisoners are executed rather than imprisoned for life.

If capital trials take 3.5 times longer … the additional forgone output of these jurors is greater than that in a non-capital murder trial.

Another opportunity cost associated with capital trials is the time spent by jurors. During a capital trial, jurors are required to attend the trial every day and listen to testimony. While performing their jury role, jurors are not working at their usual job. If jurors are paid $15 per day during a four-week trial, the total cost to the court is $4,200. However, this estimate may well understate the actual opportunity cost incurred as the jurors cannot generate output at their regular jobs. If capital trials take 3.5 times longer (due to the lengthy appeals process and the grave nature of the outcome), the additional forgone output of these jurors is greater than that in a non-capital murder trial.

One of the central questions in economics is ‘how do we best allocate scarce resources between an unlimited number of competing uses?’. Therefore, policymakers must consider whether allocating such considerable amounts of land, capital and labour resources to this form of punishment is the most efficient use of such scares resources. But this seems not to be taken into consideration when deciding whether the death penalty makes economic sense.

The principal consideration when evaluating the issue of retaining capital punishment is the incremental deterrent effect of executing criminals. Early experimental analysis by Isaac Ehrlich found that when a defendant is faced with a choice of either being executed or being imprisoned for life, they rarely choose execution. More recent work by economists Hashem Dezhbakhsh, Paul Rubin and Joanna Shepherd provides strong support for Ehrlich’s thesis; through careful econometric analysis, that one execution deters 18 murders. From an economic standpoint this deterrent effect of capital punishment is what really matters, and therefore the fact that execution do appear to deter crime lends credence to the notion that capital punishment does in fact make economic sense.

Yet, does the average person experience and realise this? Perhaps not. Instead, they experience lower disposable income and reduced access to public services, and arguably this is the impact that really matters to the masses, suggesting this punishment, when considering the economics of it, is not justified.


Ultimately, the practice of capital punishment has a far reaching financial and economic impact upon the state. The millions of dollars spent on practicing the death penalty would be better spent on arguably better causes such as education, rehabilitation and a larger police force. One report estimated that the states practicing the death sentence could save up to $90 million each year by abolishing capital punishment. In a world of scarce resources and huge opportunity costs, questions must be asked as to whether capital punishment is the best use of those resources.