Can disclosing information about corrupt practices reduce corruption levels?

Responsible researcher: Viviane Pires Ribeiro

Article title: Does Exposing Corrupt Politicians Reduce Corruption?

Article authors: Gustavo J. Bobonis, Luis R. Cámara Fuertes and Rainer Schwabe

Location of intervention: Puerto Rico

Sample size: Municipal audit reports during the period 1987-2006

Sector: Political Economy and Governance

Type of Intervention : Effects of disclosing corrupt practices

Variable of main interest: Corruption

Evaluation method: Others - Political Agency Model

Assessment Context

In a well-functioning representative democracy, citizens must select competent politicians to manage public affairs and hold them accountable for their performance. A precondition for these goals of democratic government is that citizens have access to adequate information about the character, abilities, and performance of candidates while in public office.

A growing number of studies recognize the need for voters to access information to evaluate politicians' performance. Disclosing political information can improve government responsiveness, reduce corrupt practices, reduce rent-seeking (political behavior seeking income or seeking special privileges), increase electoral responsibilities and improve well-being social.

Intervention Details

Bobonis et al. (2010) study the effects of disclosing local government corruption practices on long-term levels of corruption in municipal governments. According to the authors, this work overcomes previous limitations, using data from a unique scenario: audit reports on municipal government activities carried out regularly in Puerto Rico. The government of Puerto Rico established a systematic mechanism to conduct municipal government audits, the results of which were made publicly available and disseminated to media sources.

Specifically, the authors use a unique longitudinal data set of corruption findings, constructed from audit reports for municipalities during the period 1987-2006, aiming to compare (i) the short-term levels of corruption of municipalities audited before versus after each election, as well as (ii) subsequent levels of corruption reported in audits and other municipal results.

Methodology Details

To perform the analysis Bobonis et al. (2010) used a simple model of political agency, in which voters are able to decide the re-election of an incumbent politician, but are not able to observe the degree of competence and actions of such a politician. In this model, if voters re-elect mayors based on their performance and reputation in public office, a mayor whose reputation has been enhanced in the past may exploit this information asymmetry to later engage in special privilege-seeking activities, leaving voters indifferent between re-election and elect an inexperienced candidate. Given these perverse reputational incentives, the model predicts that re-elected mayors who have refrained from special privilege-seeking activities in the past may, on average, be more corrupt in the future than other mayors.

Results

The results confirm previous evidence that audits reduce municipal levels of corruption, consistent with the fact that there is a substantial short-term disciplinary effect of audits in the municipality. The data shows that the release of audit information causes an improvement in electoral accountability, reducing the re-election rates of incumbent mayors by 7 percentage points (25%) in municipalities where corruption was reported, as well as a 14 percentage point reduction in cases in which two corruptions (or more) were reported.

In contrast to these previously identified short-term effects of audits, municipal levels of corruption observable in the subsequent audit are 22% of a standard deviation higher in municipalities audited before the previous election than in those whose reports were disseminated after the previous election. . Furthermore, the effects of seeking special privileges are concentrated among municipalities whose incumbent mayors refrained from “rent-seeking” activities in the first audit. Estimates indicate that special privilege seeking activities have increased from 0.55 to 1 standard deviation among municipalities with favorable results in the previous audit, while there is no discernible change in corruption in municipalities whose incumbent mayors were reported to be involved in corruption in the previous audit. first case. The results provide empirical support for the argument that short-term information disclosure policies do not necessarily align politicians' actions with voters' long-term preferences.

Public Policy Lessons

The study carried out by Bobonis et al. (2010) contributes to the growing empirical literature by indicating that the pre-election release of audit reports led to significant short-term reductions in levels of municipal corruption and an increase in the electoral accountability of the incumbent mayor. However, municipal levels of corruption in the subsequent term are higher in municipalities audited before the previous election and these are concentrated among municipalities that refrained from special privilege-seeking activities in the first audit.

Therefore, the analysis highlights the role of information disclosures in improving political accountability in the short term and the plausible negative consequences for political behavior in the long term. In particular, the study employs empirical support for the argument that although information disclosure policies may lead to greater social well-being in the short term, they do not necessarily align politicians' actions with voters' preferences in the long term.

References

Bobonis, G. J., Fuertes, L. R. C., & Schwabe, R. (2010). Does Exposing Corrupt Politicians Reduce Corruption?. Unpublished paper, University of Toronto.