Did this explosion in incarceration cause the crime decline?
It turns out that increased incarceration had a much more limited effect on crime than popularly thought. We find that this growth in incarceration was responsible for approximately 5 percent of the drop in crime in the 1990s. (This could vary from 0 to 10 percent.) Since then, however, increases in incarceration have had essentially zero effect on crime. The positive returns are gone. That means the colossal number of Americans cycling in and out of prisons and jails over the last 13 years was not responsible for any meaningful fraction of the drop in crime.
The figure below shows our main result: increased incarceration’s effectiveness since 1980. This is measured as the change in the crime rate expected to result from a 1 percent increase in imprisonment—what economists call an “elasticity.” During the 1980s and 1990s, as incarceration climbed, its effectiveness waned. Its effectiveness currently dwells in the basement. Today, a 1 percent increase in incarceration would lead to a microscopic 0.02 percent decline in crime. This is statistically indistinguishable from having no effect at all.