1. Cost-Benefit Analysis for Justice
Policy: A Step-By-Step Guide
January 25, 2011
Mike Wilson, Oregon Criminal Justice Commission
Lora Krsulich, Vera Institute of Justice
Slide 1

2. Cost-Benefit Analysis for Justice Policy:
A Step-by-Step Guide
January 25, 2011
Michael Wilson Lora Krsulich
Oregon Criminal Justice Commission Vera Institute of Justice
Slide 2

3. The Cost-Benefit Knowledge Bank for Criminal Justice
(CBKB) is a project of the Vera Institute of Justice
funded by the U.S. Department of Justice’s Bureau of
Justice Assistance.
•Website (cbkb.org)
•CBA toolkit
•Snapshots of CBA literature
•Podcasts, videocasts, and webinars
•Roundtable discussions
•Community of practice
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4. Today’s Agenda
Introduction and Housekeeping 5 minutes
Review Data Tables 5 minutes
Calculate the Cost of an Offense 15 minutes
(Example 1)
Apply Cost-Benefit Analysis to 20 minutes
Oregon State Drug Courts
(Example 2)
Question and Answer 10 minutes
Wrap-Up 5 minutes
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5. Housekeeping items
Questions
 Use the chat feature to send us
questions during the webinar.
 Raise your hand to ask a question
during a question and answer period. I
will call on you and give you
instructions for how to un-mute your
phone line.
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6. Housekeeping items (continued)
Webinar support and troubleshooting
 Call: (800) 843-9166
 E-mail: help@readytalk.com
Handout
This webinar is being recorded.
Slide 6

7. Series Preview
You will learn how to:
 Assess your state’s return on investment
from criminal justice expenditures
 Explain the costs of crime and benefits
from crime avoided
 Consume and produce high-quality
cost-benefit analysis
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8. Part 1 Recap
Discussed prison economics and return on
investment from incarceration
Deconstructed costs into their component parts:
estimates, probabilities, and sentencing
distributions
Interpreted an effect size and demonstrated how
effects sizes are used to produce CBA findings
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9. Part 2 Preview
You will learn how to:
Calculate the cost of an offense using
real numbers from Oregon
Build a cost-benefit model
Use cost-benefit analysis in
decision making
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10. Review Data Tables
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11. Table 1: Oregon Cost Estimates
Costs by
crime type
Costs by
resource
use
Taxpayer
and victim
costs
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12. Figure 1: Probability of Arrest, Conviction and
Incarceration
Offense
Unreported Offenses Reported Offenses
No Arrest Arrest
No Conviction Conviction
Department of
Local Jail Probation
Corrections
Post-Prison
Supervision
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13. Table 2: Estimated Probability of Arrest and
Conviction
Probability Probability Probability Probability
offense offense offense arrest
reported leads to leads to leads to
arrest conviction conviction
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14. Table 3: Sentencing Distribution
Probability Probability Probability Average
conviction conviction conviction length of
leads to leads to jail leads to sentence
prison probation
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15. Questions?
Please raise your
hand. If the
moderator calls on
you, press *7 on
your phone to
un-mute your line.
Slide 15

16. Example 1:
Calculating the Cost
of an Offense
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17. Example 1
What is the estimated cost of an assault?
Victimization $_______
Arrest $_______
Conviction $_______
Adult Corrections $_______
Jail $_______
Probation $_______
Post-Prison $_______
Supervision
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18. What is the estimated cost of an assault?
Victimization:
Out-of-pocket victim costs $7,921 Table 1
Quality-of-life victim costs $12,232 Table 1
Total cost $20,153
Add out-of-pocket costs and quality-of-life
costs.
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19. What is the estimated cost of an assault?
Arrest:
Cost of arrest $670 Table 1
Probability of arrest 0.32 Table 2
Total cost $214
Multiply cost of an arrest by probability of
arrest.
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20. What is the estimated cost of an assault?
Conviction:
Cost of conviction $4,877 Table 1
Probability of conviction 0.15 Table 2
Total cost $732
Multiply cost of a conviction by probability
of conviction.
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21. What is the estimated cost of an assault?
Adult Corrections:
Number of convictions per 0.15 Table 2
offense
Probability of adult corrections 0.35 Table 3
given conviction for assault
Present value of prison costs Must
calculate
Total cost
Multiply number of convictions per
offense by probability of adult corrections
and present value of prison costs.
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22. What is the estimated cost of an assault?
Present value of adult corrections costs:
Unit of measurement Measure Source
Cost per year $13,851 Table 1
Average length of 46.87 months Table 3
sentence (4 years)
Discount rate 3 percent Common
practice
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23. What is the estimated cost of an assault?
Present value of adult corrections costs:
Cost of Year 1 $13,851/(1+0.03)
Cost of Year 2 $13,851/(1+0.03)^2
Cost of Year 3 $13,851/(1+0.03)^3
Cost of Year 4 $13,851/(1+0.03)^4
Total present value $51,485
Add cost per year of imprisonment and
incorporate time value of money.
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24. What is the estimated cost of an assault?
Adult Corrections:
Number of convictions per offense 0.15 Table 2
Probability of adult corrections given 0.35 Table 3
conviction for assault
Present value of prison costs $51,485 See previous
slide.
Total cost $2,703
Multiply number of convictions per
offense by probability of adult corrections
and present value of prison costs.
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25. What is the estimated cost of an assault?
Use the same formula from prison costs to
calculate the costs for jail, probation, and
post-prison supervision:
Number of convictions
Probability of resource use
Present value of costs
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26. Example 1
What is the estimated cost of an assault?
Victimization $20,153
Arrest $214
Conviction $732
Adult Corrections $2,703
Jail $560
Probation $773
Post-Prison Supervision $553
Total cost $25,688
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27. The cost of an assault and other types
of crime
The cost of one assault is $25,688.
It is possible to calculate the cost of multiple
offenses.
It is also possible to change the unit measured
to calculate the cost of fewer arrests,
convictions, inmates, parolees, or probationers.
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28. Questions?
Please raise your
hand. If the
moderator calls on
you, press *7 on
your phone to
un-mute your line.
Slide 28

29. Example 2:
Applying cost-benefit analysis
to Oregon drug courts
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30. Example 2: Oregon Drug Courts
Are Oregon’s drug courts cost-beneficial for
100 drug court participants?
 Determine the impact of the initiative.
 Determine whose perspective(s) matter.
 Measure costs.
 Measure benefits (in dollars).
 Compare costs and benefits.
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31. Determine the impact of the initiative.
Do we have an evaluation of drug courts in
our state?
 No, but WSIPP meta-analysis estimates a
crime reduction of about 12% based on 57
studies.
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32. Determine the impact of the initiative.
Other considerations:
 Does the effectiveness of the program go
down over time?
Decay rate
 What crimes does the program apply to?
 How many years out does the program
measure recidivism?
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33. Determine whose perspectives matter.
State, federal, and local funding
Total costs or compared to alternative?
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34. Measure costs.
What we know in Oregon:
 How much state funding goes to drug
courts
 How many participants
 Can estimate state dollars per participant
Don’t know how much local funding
Don’t know how much “business as usual” costs
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35. Measure benefits (in dollars).
Need to be clear on what benefits are being
measured
Tax benefits are a mixture of state and local
benefits
For Oregon drug court model, most benefits
were “costs avoided” (both taxpayer and victim )
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36. Table 4: Recidivism of Drug Court and
Property Probationers Convicted in 1997
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37. Table 5: Conviction Distribution for 100 Drug or
Property Probationers, 1997
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38. Table 6: Estimated Convictions Avoided for 100
Drug Court Participants
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39. Measure benefits (in dollars).
Taxpayer benefits (avoided costs):
 Costs per felony conviction
 Average number of convictions per 100
participants (Table 6)
Victimization benefits (avoided costs):
 Costs per felony conviction
 Average number of convictions per 100
participants (Table 6)
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40. Table 7: Cost of an Adult Felony Conviction
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41. Table 7: Cost of an Adult Felony Conviction
Table 7 changes the unit measured from the
cost of an offense (as in Example 1) to cost of
conviction.
To calculate cost of conviction, must use cost
estimates (Table 1) and probabilities (Table 2).
Number of convictions averted is most common
outcome measured in drug court evaluations.
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42. Table 8: Estimated Taxpayer Benefit for 100
Drug Court Participants
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43. Table 9: Estimated Crime Victim Benefit for 100
Drug Court Participants
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44. Compare costs and benefits.
Total costs: $2,000 to $4,000 per participant
Total benefits: $4,100 per participant
For every dollar invested, we avoid $2.05 to
$1.02 in costs.
Oregon decided to continue to fund drug courts,
in part because of the vast amount of research
on effectiveness of drug courts.
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45. Questions?
Mike Wilson
SAC Director/Economist
Oregon Criminal Justice Commission
Michael.K.Wilson@state.or.us
(503) 378-4850
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46. Wrap-Up
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47. Part 2 Review
Calculated the cost of an offense using real
numbers from Oregon
Built a cost-benefit analysis of an Oregon drug
court
Demonstrated how cost-benefit analysis can be
used in decision making
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48. Series Review
Learned how to:
 Assess your state’s return on investment
from criminal justice expenditures
 Explain the costs of crime and benefits
from crime avoided
 Consume and produce high-quality
cost-benefit analysis
Slide 48

49. Follow-up
Please complete the evaluation form as you leave this
training.
To receive information and notifications about upcoming
webinars and other events:
• Visit the Cost-Benefit Knowledge Bank for Criminal Justice at
http://www.cbkb.org.
• Follow us on Twitter at http://www.twitter.com/CBKBank.
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50. Contact Information
Lora Krsulich
lkrsulich@vera.org
(917) 453-0931
cbkb@cbkb.org
http://www.cbkb.org
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51. This project is supported by Grant No. 2009-MU-BX K029 awarded by the
Bureau of Justice Assistance. The Bureau of Justice Assistance is a
component of the Office of Justice Programs, which also includes the
Bureau of Justice Statistics, the National Institute of Justice, the Office of
Juvenile Justice and Delinquency Prevention, and the Office of Sex
Offender Sentencing, Monitoring, Apprehending, Registering, and
Tracking. Points of view or opinions in this document are those of the
author and do not represent the official position or policies of the United
States Department of Justice.
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52. Thank you!
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