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This analysis seems way too simplistic. These prisoners were given a gift of a shorter sentence. People don't like losing something they've been given and so work hard to avoid losing it. I don't think you'd see this effect if you just changed the laws and made prison sentences longer for everyone.

Only these people had the potential for a longer sentence, and compared to society at large, they knew they would be treated more severely. Thus the relative size of their potential punishment is larger then the rest of the people walking around outside. Nobody likes being treated harsher than the person next to them. That has got to have an effect on a person.

Agreed. It's hard to say how well this would extend to actually increasing the sentence for the crime itself. In this case, they already have the extra years, so I imagine that it looms larger in their mind. I don't know the psychology behind it, and I'd love to hear someone more knowledgeable chime in, but I suspect that the effect is far different than learning about an increased penalty for some hypothetical future crime they might later commit.
>the relative size of their potential punishment is larger then the rest of the people walking around outside.

The articla does not compare the prisoners to "the rest of the people" but to other prisoners in this program. And within this group, they are "deterred by longer sentences".

The ones with longer potential sentences

1) have received a larger gift, and would thus lose something larger. They may also experience a stronger desire to reciprocate this gift back to society.

2) can imagine a larger perceived injustice (compared to everyone else) if they are put in jail again. People judge things (including the size of punishment) through comparison, not absolutely. The key concept here is the punishment you would receive when "compared with others". If a person would get a larger sentence for an identical crime it offends there sense of justice and highlights the negative aspects of the punishment making it more salient in there minds.

I think my opinions above are still valid.

If you want to deter crime, use brain scans to identify potential criminals and give them medication to change the way their brain works.
For deeper thoughts on the use of psychology as a means of control, see Thomas Szasz, especially The Myth of Mental Illness . http://en.wikipedia.org/wiki/The_Myth_of_Mental_Illness

While there surely exist some disorders rooted in physical defects of the brain, mental illnesses too often become a means of forcing people into conformity. Thus, the use of illicit drugs is evidence of mental illness and must be treated.

The two are not mutually exclusive. Mental illness can be used as a means to forcing people into conformity (don't kill!) while also being a direct result of a flawed brain (too violent).
This is why Hemingway is so popular amongst the rabble, while hardly any of them touch Joyce or Proust.
Had I known that I wouldn't have set up my alarm to read The Old Man and the Sea in the authoritative voice before my house got robbed last month.
So they're saying that incentives actually matter. Huh.

Actually, I think this needs to be qualified. When penalties are pushed so high that the criminal quickly reaches a penalty plateau, then they "in for a penny, in for a pound": if they're willing to commit the smaller crimes, it quickly escalates to larger ones.

So if the penalty for kidnapping is death, then you may as well kill the kid to eliminate witnesses; the murder charge won't hurt you any further. And if you're killing one person, you may as well kill a whole roomful: the first is expensive, the rest are free.