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A huge problem in our society is that prisons are run with an eye to keep costs low. There is apparently some evidence that this may lead to higher recidivism rates, which is much more costly to society than it would have been to pay for a better quality of life for prisoners (see e.g. http://www.theguardian.com/society/2013/feb/25/norwegian-prison-inmates-treated-like-people ). The goal should be to lower the total cost to society, not just the direct cost of running the prison.
Therefore, we should try recidivism rate contracts for prisons: the prison contractor is paid a fixed rate for the first two years, and then is paid in inverse proportion to the recidivism rate of people who were at the prison.
companies would bid for this, e.g. company A bids "I'll run this prison for $1000/(recidivism rate) per year" and company B bids "I'll run this prison for $500/(recidivism rate) per year".
