Responsible researcher: Angelo Cruz do Nascimento Varella
Article title: EXPOSING CORRUPT POLITICIANS: THE EFFECTS OF BRAZIL'S PUBLICLY RELEASED AUDITS ON ELECTORAL OUTCOMES
Article author: Claudio Ferraz and Frederico Finan
Location of intervention: Brazil
Sample size: 373 Brazilian municipalities
Major theme: Economic Policy and Governance
Type of Intervention: Re-election of mayors in
audited municipalities
Variable of main interest: Information from random public audits in municipalities with mayors running for re-election
Evaluation method: Experimental Evaluation (RCT)
Assessment Context
Information and transparency are necessary for the proper functioning of a democracy. To this end, citizens must be informed about their leaders in order to hold them responsible for their actions and define who should be chosen in electoral processes. However, in systems where citizens do not receive sufficient information about incumbent politicians, it is not possible to monitor or penalize inappropriate acts.
In this sense, efforts to increase transparency and the availability of useful information to society, such as public audits, constitute fundamental elements for the identification of corrupt politicians by voters. Consequently, it becomes possible to punish corruption, in order to force such politicians to act in the public interest, or even strengthen the candidacy of suitable individuals.
In order to strengthen transparency and make relevant information available about the use of federal funds in Brazilian municipalities, the Federal Government began, in 2003, one of the main initiatives to combat political corruption in Brazil, through the General Comptroller of Union (CGU). This program was used by researchers to evaluate the impact that the disclosure of such information had on the Brazilian municipal elections in 2004.
Intervention Details
The CGU Public Draw Inspection Program consists of a lottery system that randomly chooses Brazilian municipalities to have their accounts audited. Municipalities with less than 450 thousand inhabitants can be drawn, which encompasses around 73% of the country's population, excluding capitals and large urban centers. The aim of the program is to ensure the appropriate use of federal resources transferred to Brazilian municipalities, ensuring society's participation in monitoring public spending.
Once chosen by lottery, the CGU collected all available information about the federal funds received by the municipality between 2001 and 2003. Subsequently, a group of 10 to 15 auditors were sent to the site to examine the accounts and official documents, inspecting whether there were something improper or inadequate in the municipality's budget execution, as well as the quality of public goods and services offered. It is worth noting that the auditors went through a strict verification system and were well trained, remunerated and supervised.
After approximately 10 days of inspection, the auditors produced a formal report that was sent to the CGU headquarters in Brasília. Subsequently, the reports were forwarded to the Federal Audit Court (TCU), public prosecutors and the respective municipal legislative branch. The reports were also summarized for publication on the online and later sent to major media channels.
Methodology Details
By July 2005, the program had carried out 676 audits in 669 different municipalities. To define the impact of publishing the results of public audits on the elections, it was necessary to select only the municipalities in which the mayors were eligible for re-election, totaling 373 municipalities, which constitute the database used in the research.
From the formation of this database, the researchers divided the municipalities covered into two groups, according to the date on which the public audits were carried out:
The purpose of this division is to determine whether the occurrence of a public audit has the potential to influence voters' decisions. As the database was formed randomly by the lotteries, it is possible to use it to measure whether municipal audits had an impact on the re-election of mayors and on vote margins.
With regard to acts of political corruption, the authors differentiate the levels of corruption according to the recurrence of identification of corrupt practices or acts. In other words, how many times the reports identified acts of fraudulent procedures, embezzlement of public funds or overbilling during the term of office of the mayor eligible for re-election.
To complement the analysis, information was also used on the electoral processes of the municipalities, in the years 2000 and 2004, as well as data on mayors, coming from the Superior Electoral Court (TSE). Additional information about the municipalities was extracted from the 2000 Demographic Census and the survey “Profile of Brazilian Municipalities: Public Management”, both carried out by the Brazilian Institute of Geography and Statistics (IBGE).
One of the most important complementary variables for the analysis is the presence of local media, represented mainly by AM radio stations. The authors highlight that although newspapers and television media cover the results of public audits, the absorption of these media does not compare to the presence of regional radio stations, which have a significant importance in the dissemination of political information in Brazilian municipalities, as they cover 79% of homes in these locations have a radio.
Results
The results obtained by the researchers indicate that public audits and the disclosure of information about acts of political corruption before elections decrease the probability of re-election of mayors identified as corrupt. In municipalities with two violations identified by audits, the probability of mayors' re-election was 17% lower when audits occurred before the elections, compared to municipalities audited after the elections. Even in cases where mayors identified as corrupt managed to be re-elected, the vote margin observed was smaller.
Another result found by the researchers points to the fact that well-informed voters penalize politicians with higher levels of corruption. In the municipalities audited before the elections, the probability of the mayor's re-election was reduced by 7 percentage points for each act of corruption identified. In the control group, when the audits took place after the elections, there were no observable changes in the probabilities of re-election of corrupt mayors. Obviously, this information contributes to the argument that voters would like to penalize acts of corruption, but do not have the necessary information to implement such attitudes.
By carrying out the study, it is also possible to state that the presence of local media favors the dissemination of useful information to society. It was identified by researchers that in municipalities in which mayors had three corrupt acts identified by audits before the elections, AM radio coverage reduced the probability of re-election by 16 percentage points. In places without the presence of regional radios, the reduction observed was only 3.7 percentage points.
In addition to penalizing corrupt politicians, the presence of local media also favors the re-election of correct politicians. Under regional radio coverage, politicians who had no corrupt acts identified increased their chances of re-election by 17 percentage points. This occurs because credible information shapes voters' decisions, causing corrupt politicians to be penalized and reputable politicians to benefit, which can also have an impact on the actions of the political class as a whole.
Public Policy Lessons
The research demonstrates that the dissemination of credible information is fundamental to the full exercise of democracy. Public audits have the ability to inform the population in order to encourage good practices in combating corruption, as long as this data is passed on in an intelligible and accessible way. Once relevant information is absorbed by voters, corrupt politicians tend to be penalized and honest opponents tend to benefit.
To this end, the presence of local media is relevant, as is transparency and the production of useful information. The presence of local radio stations demonstrates that communication channels with the public are important because they disseminate necessary information and adapt voters' expectations, influencing election results and implementing accountability for acts of political corruption. It is not enough to produce information, it has to be properly absorbed by society.
Reference
FERRAZ, Claudio; FINAN, Frederico. Exposing corrupt politicians: the effects of Brazil's publicly released audits on electoral outcomes. The Quarterly journal of economics, vol. 123, no. 2, p. 703-745, 2008.
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