TO DEMONSTRATE THE EFFECTIVENESS OF THE METHODOLOGY USED THE ANALYSIS COMPARED SIX HALFWAY HOUSES, SIX PROBATIONED OFFENDERS REHABILITATION AND TRAINING PROJECTS, SIX JUVENILE RESIDENCES, TWO JUVENILE CORRECTIONAL FACILITIES, AND FOUR ADULT INSTITUTIONS. ECONOMIC CONCEPTS WERE USED TO DEFINE AND MEASURE BOTH LONGRUN AND SHORTRUN COSTS AND OUTPUTS. USING THREE DIFFERENT MEASURES OF RECIDIVISM (VOLUME OF OFFENSES, OFFENSE SERIOUSNESS, AND PENALTY SEVERITY), PROBATION WAS FOUND TO BE MOST COST EFFECTIVE IN THE VERY SHORTRUN (ALL FACTOR INPUTS FIXED), IN THE SHORT RUN (SOME VARIABLE FACTOR INPUTS), AND THE LONGRUN (ALL FACTOR INPUTS VARIABLE). FOR EXAMPLE, COST PER DAY IN THE VERY SHORTRUN RANGED FROM $2.13 PER CLIENT DAY FOR PROBATION OR PAROLE TO $6.92 FOR ADULT HALFWAY HOUSES. FOR JUVENILES, PROBATION OR PAROLE COST $3.20 PER CLIENT DAY IN THE VERY SHORTRUN VERSUS $3.27 FOR JUVENILE INSTITUTIONS AND $5.96 FOR JUVENILE RESIDENCES. ALTHOUGH INCARCERATION WAS MORE EFFICIENT THAN COMMUNITY CORRECTIONS IN THE VERY SHORTRUN, IT WAS MORE EXPENSIVE IN THE SHORTRUN AND COST ABOUT TWICE AS MUCH AS COMMUNITY-BASED CORRECTIONS IN THE LONGRUN. RESULTS SUGGEST THAT (1) A POLICY OF USING COMMUNITY-BASED CORRECTIONS FOR CLIENTS WHO WOULD OTHERWISE BE PLACED ON PROBATION IS UNDESIRABLE, AND THAT (2) NEW JUVENILE FACILITIES SHOULD NOT BE CONSTRUCTED. RESULTS ALSO SHOW THE USEFULNESS OF COMBINING COST INFORMATION WITH RECIDIVISM RESULTS, USING ECONOMIC CONCEPTS, TO MAKE A COOST-EFFECTIVE POLICY DECISION AND THEREBY INCREASE THE PRODUCTIVITY OF THE CRIMINAL JUSTICE SYSTEM. TABLES PRESENTING COSTS FOR EACH ALTERNATIVE, FOOTNOTES, AND A BIBLIOGRAPHY ARE INCLUDED. (CFW)