Illness to Incarceration: Imprisonment as a False Substitute for Inpatient Mental Health Care

I contribute new evidence regarding the substitution of incarceration for inpatient mental healthcare. I estimate the empirical relationship between state-level mental health care expenditures and incarceration rates using standard panel data methods. Results indicate increased public expenditures on inpatient mental health reduce the number of imprisoned individuals. Providing funding for one additional inpatient hospital bed per 100,000 population reduces incarceration rates by 1.05 per 100,000. However, if we just consider incarceration and inpatient mental health as a way to remove individuals from society, incarceration saves the state $220,000 per-person per year. Results indicate that states have the financial motivation to substitute imprisonment for incarceration, despite their lack of substitutability from a therapeutic standpoint.