top of page

A World Within a World

Economics inside Prisons
Aadesh Gupta

“The prisoner’s world is an atomised world. Its people are atoms acting in confusion.”

These words by sociologist Donald Clemmer delineate prison as an entirely erratic environment. A space governed by chaos, where individuality signifies little and inmates are rendered anonymous. Perhaps the absence of a sturdy social structure allows unpredictability to persist, but in spite of this, a closer inspection of prison culture reveals that there is some degree of order.

In fact, the prison environment works particularly well as an example for fundamental economic concepts, namely, the exchange of goods and services. The established method of providing necessities to inmates is through commissaries: a store containing items approved for inmate ownership. Cash is prohibited, so money earned in a prison job or sent in from outside is transferred into an account, through which prisoners can purchase commissary items using an ID card, much like a debit card system.

However, besides the official routes of consumption, prisons often have a complex black-market system where inmates trade amongst each other. Products range from cooked meals to haircuts, and since cash is outlawed, prisons have naturally moved towards a barter economy where goods and services are swapped instead of purchased with money. This is actually preferred by many inmates – money is “top- level contraband” which makes it far too risky to hold, so much so that inmates won’t even accept twice the amount of cash for their goods and services.

But economics tells us that a lack of money has a fundamental problem: the ‘double coincidence of wants’ – when bartering, inmates will not only need to find an item they want, but also find another inmate who wants their item. There is, then, a distortion in the value of products, which hinders exchange.

Still, the absence of fiat money wouldn’t bring the prison market to a halt. Inmates simply invented their own makeshift money. Tobacco was used as a common currency in US prisons, and after its ban, more innocuous items like ramen noodles replaced it. In the UK, inmates prefer kitchen spices and tuna fish. Postage stamps, combination locks, and instant coffee are a few other forms of payment.

One particularly striking example of prison currency is the use of prepaid cards. American bank holding company, Green Dot, has a product called ‘MoneyPak’ – a prepaid card on which you can load $20 to $500, and then send it to someone else or use it to fund online accounts. In order to access the funds on the MoneyPak, you need to scratch away the back and reveal a 14-digit number (known to inmates as “dots”).

In US prisons, a known outsider will purchase a MoneyPak, obtain the 14-digit number, and pass it onto an inmate.

Now this number is money. It is exchanged throughout the prison for goods and services, changing hands multiple times, before it’s passed onto another outsider and converted to cash.

The prepaid card number is portable, durable, limited in supply, accepted as a medium of exchange, stable in value, and divisible to a considerable extent (down to $20 per unit)—a currency that almost perfectly fits the criteria of what economists consider ‘good money,’ making the prison environment a monetised economy in its own right.

Further insights can be drawn if we look at prison through the lens of social behaviour. Despite Clemmer’s anarchic characterisation of prison, his work largely revolves around the process by which new inmates assimilate into prison subculture, for which he coined the term “prisonisation”. According to mid-20th century sociology, this is an outcome of ‘the deprivation model,’ which suggests that prison subculture emanates due to the removal of outside privileges. When liberty, autonomy and privacy are relinquished, inmates gain consolation in conforming to a new set of social norms, hierarchies and codes, all of which impact behaviour inside prisons.

Hence, it’s pertinent for us to consider this subculture when discussing prison economics, particularly inmate decision- making. In the past, game theory has helped us extensively in modelling economic behaviour, and prison culture happens to be at the heart of its most seminal concept: the prisoner’s dilemma. In this game, two prisoners, say A and B, are each given two choices: to cooperate by staying silent, or to defect by betraying their fellow prisoner. Every combination of decisions comes with its own outcome, quantified by the length of each prisoner’s sentence.

The Nash equilibrium, a situation where neither prisoner can change their option without deteriorating their payoff, of this game is where both prisoners betray each other. So theoretically, defecting is more favourable than cooperating, but is this always the case?

Loyalty is consecrated in prison culture, and ‘snitching’ is seen as sinful. The inmate who chooses to defect may be a brave whistleblower to the outside world, but they’ll likely face negative consequences within their own community, ranging from ostracism to violence. This necessitates a revision of the game’s payoffs – defecting now comes with a “negative social impact” above the initial sentence (highlighted in Figure 1). Assuming this is highly significant, the game has a new Nash equilibrium where both prisoners cooperate. Inmates face a trade-off between accepting the prolonged sentence or being shunned by their peers—it’s a lose-lose game for everyone except the prison itself; the house always wins.

Ironically enough, the prisoner’s dilemma works well in a myriad of applications except the one it first drew inspiration from: prisons. This doesn’t diminish its practicality, but it indicates that simply reducing prisoner behaviour down to an analogous example is somewhat a misstep, and substantial deliberation on the topic is called for.

Evidently, policymakers concerned with regulating the prison environment have much to consider. From the ease of illicit trade in the black market, to the intrinsic unrest of inmate subculture, everything here seems to impede stability in prisons. At first glance, it may seem reasonable to initiate a crackdown on these activities and behaviours, but that’s likely to stir up more trouble.

Counterintuitively, crime is not always the central reason for prison economics. Many inmates use earnings to support their families, and bartering establishes social connections, thereby maintaining a sense of community. Eliminating these aspects will likely exacerbate the issues in prison culture, so policymakers must accommodate them by designing rules and rehabilitation programmes accordingly.

Such a meticulous approach to regulating social communities is beneficial outside prisons too, and as evidenced by the behaviour of inmates, the prison world has more in common with our world than we may first expect. It’s fitting then, to conclude with another statement from Clemmer in the context of US prisons:


“While no effort has been made to compare the prison world with a non-penal community, certain broad similarities become evident. In a sense the prison culture reflects American culture, for it is a culture within it.”

Screenshot 2024-01-19 at 15.02.48.png

Figure 1: The Dilemma of The Prisoner

bottom of page