Bernard E. Harcourt's "From the Asylum to the Prison"
I've just finished reading this paper from Texas Law Review 84:1751-86 [2006]. I am not in a position to analyze his statistical work, but he makes an argument that I find quite persuasive, because of the book that I am currently writing about the deinstitutionalization of the mentally ill. Harcourt's primary claim is that social scientists need to look at both prisons and mental hospitals in understanding the incarceration revolution--that a great many of the failures to adequately predict crime rate changes go away if you look at both categories of incarceration--not just prisons.
A secondary claim is that if you combine national prison and mental hospital incarceration rates for the period 1928-2000, there is a very strong negative correlation to homicide rates: -0.78, and that this strong negative correlation survives when you factor in unemployment and demographic changes. This should not be any big surprise; about 7% to 16% of current prison inmates are mentally ill. A fair number of people that might, in 1950, been locked up in a mental hospital, now wander the streets until they commit some fairly serious crime. In a few cases that make headlines, they commit mass murder, and follow it up with suicide. The current levels of prison incarceration, while high by the standards of the 20th century, when examined in conjunction with mental hospital lockups, just barely reaching the levels common in the 1930s through the 1950s.
One substantial difference that Harcourt doesn't address--and which might influence the apparent causal connection on this--is that a surprisingly large percentage of pre-1960 mental hospital populations were syphilitic insane and elderly senile. Syphilitic insanity largely faded away with the introduction of penicillin after World War II, and the elderly senile, who contributed to that large mental hospitalization rate, transferred over to a variety of private nursing care facilities as a result of the Medicare program in the early 1960s.
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