Cost-Benefit Jumps the Shark: The Department of Justice's Economic Analysis of Prison Rape

Cross-posted from Georgetown Law Faculty Blog.

Despite initial signs suggesting a different path, the Obama Administration has promoted the role of cost-benefit analysis in regulatory policy as fiercely as any administration before it. Nothing demonstrates this more clearly, I think, than the Administration’s bizarre and unfortunate decision to apply cost-benefit analysis to measures to limit rape and sexual abuse. 

Last month, the Department of Justice issued a final rule on rape and sexual abuse in confinement facilities.  The rule was required by the Prison Rape Elimination Act ("PREA"), a law passed by a unanimous Congress and signed by President George W. Bush.  In PREA, Congress directed DOJ to set national standards to prevent, detect, and respond to rape and other forms of sexual abuse in federal, state, and local confinement facilities.  PREA did not say that DOJ should do a cost-benefit analysis to decide whether actions to prevent, detect, and respond to rape and sexual abuse in prison are worth it.  On the contrary, the only limit that Congress placed on DOJ's national standards was that the standards were not to impose "substantial additional costs" beyond the present expenditures of the covered facilities.  In its final rule setting the national standards called for by PREA, DOJ easily found that its standards complied with this statutory constraint.   In three quick sentences, DOJ found that even full compliance with DOJ's standards would increase total expenditures by less than 1 percent and that this additional expenditure did not exceed the statutory limit of "substantial additional costs." 

Nevertheless, under an Executive Order issued by President Obama in January 2011, and one issued by President Clinton in 1993 and embraced by Presidents Bush and Obama, DOJ went on to determine whether the benefits of its rule were justified by the costs. In its 168-page Regulatory Impact Analysis, DOJ treats the reader to a labored, distasteful, and gratuitous essay on the economics of rape and sexual abuse.

Most awful is the Department's effort to put a monetary value on avoiding rape and other forms of sexual abuse in prison.  To even try to understand the Department's analysis, you need first to understand how cost-benefit analysis works.  Cost-benefit analysis, as applied to rules like DOJ's, tries to determine the monetary value of a particular regulatory outcome – here, preventing, detecting, and responding to rape and sexual abuse in prison – by asking what the outcome is worth, in dollar terms, to the people who will enjoy it.  To do this, the cost-benefit analyst can ask one of two more specific questions: how much money is the recipient of the regulatory benefit willing to pay to receive the benefit, or, how much money would this person demand in exchange for foregoing the benefit?  If an agency were trying to figure out the benefits of a rule protecting consumers against an unsafe product, for example, the cost-benefit analyst would ask how much those consumers would be willing to pay to avoid the risk posed by the product or how much they would be willing to accept in exchange for being exposed to the risk.

Thus, it came to pass that, in supplying the White House with the cost-benefit analysis it had required under President Obama's Executive Order, the DOJ found itself in the remarkable position of asking how much money the victims of rape would be willing to pay to avoid rape and also asking how much money these victims would be willing to accept in exchange for being raped.  In the strange logic and twisted morality of cost-benefit analysis, the victim – not the perpetrator – must be willing to pay up to avoid the crime.  If not, well, too bad for the victim.

Never mind that rape is a serious crime, not a market transaction.  Never mind that framing rape as a market transaction strips it of the coercion that defines it.  Never mind that the law under which DOJ was acting is the Prison Rape Elimination Act, not the Prison Rape Optimization Act.  In the topsy-turvy world of cost-benefit analysis, DOJ was compelled to treat rape as just another market exchange, coercion as a side note, and the elimination of prison rape as a good idea only if the economic numbers happened to come out that way.

Compounding the outrage, DOJ went on to develop 17 different categories of rape and sexual assault and to provide monetary values of the benefit of avoiding each of these categories – thus providing, in its words, a "hierarchy" of the different ways of sexually violating prisoners.  Reading DOJ's analysis itself feels like a violation.  For example, to justify giving rape committed without physical force the same economic value as rape with physical force, DOJ offered a belabored treatment of why rape can be bad even if no physical force is used, relying substantially on public comments critical of DOJ's initial suggestion that rape without physical force was only one-fifth as bad as rape with such force.  One must wonder: was it really so hard for DOJ to realize that rape without physical force can be as devastating as rape with it?  Did DOJ – the Department of Justice, the legal arm of the U.S. government – really not understand this until the public comment period for this rule?

Ultimately, the DOJ's problematic taxonomy of sexual abuse in prisons played no role in its rule.  Nor, even, did DOJ's overall economic analysis play any explicit role in the rule.  The final rule did not even allude to the many varieties of sexual abuse DOJ categorized in the Regulatory Impact Analysis, and the justification for the rule at no point stated that the rule was stopping here, rather than there, due to the specific conclusions of the economic analysis.  The painful economic analysis of prison sexual abuse is thus, cruelly and wastefully, gratuitous; the rule would have been the same without it.

Why, then, did DOJ do this analysis at all?  The White House office responsible for reviewing agency rules – the Office of Information and Regulatory Affairs (OIRA) – could have told DOJ that it need not do a cost-benefit analysis for this rule.  It could have told DOJ that it understood that an economic analysis of prison rape and sexual abuse was analytically incoherent and morally problematic insofar as rape and sexual abuse are crimes of violence and coercion, not of consent, and cost-benefit analysis presumes consent.  No law would have been violated if OIRA had done this.  Indeed, even the Executive Order under which OIRA operates would not have been violated if OIRA had done this; it provides that OIRA may waive the cost-benefit requirement whenever OIRA wants to.  That OIRA did not waive the requirement here, nor see the incoherence of an economic analysis of a crime of violence, is deeply troubling.

Applying cost-benefit analysis to rape takes this already-troubled methodology to a new, and bad, frontier.  The Obama Administration should ask itself whether this is the kind of legacy it hopes to deepen in a second term: a legacy that holds that any human encounter, no matter how violent and coerced, can be treated as just another day at the market.