Principal investigator: 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 the intervention: Puerto Rico
Sample size: Municipal audit reports during the period 1987-2006
Sector: Political Economy and Governance
Type of InterventionEffects of disclosing corrupt practices
Primary variable of interest: Corruption
Evaluation method: Others Political Agency Model
Evaluation Context
In a well-functioning representative democracy, citizens must select competent politicians to manage public affairs and hold them accountable for their performance. A prerequisite for these democratic governance goals is that citizens have access to adequate information about the character, skills, and performance of candidates while in public office.
A growing number of studies recognize the need for voters to have access to information in order to evaluate the performance of politicians. Disclosing political information can improve government responsiveness, reduce corrupt practices, decrease rent-seeking, increase electoral accountability, and improve social welfare.
Intervention Details
Bobonis et al. (2010) study the effects of disclosing local government corruption practices on long-term levels of municipal government corruption. According to the authors, this work overcomes previous limitations by using data from a unique setting: reports from regular audits of municipal government activities in Puerto Rico. The Puerto Rican government established a systematic mechanism for conducting municipal government audits, the results of which were made publicly available and disseminated to media sources.
Specifically, the authors use a unique longitudinal dataset 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 audited municipalities before versus after each election, as well as (ii) the subsequent levels of corruption reported in municipal audits and other outcomes.
Methodology Details
To conduct the analysis, Bobonis et al. (2010) used a simple model of political agency, in which voters are able to decide on the reelection of an incumbent politician, but are unable to observe the degree of competence and actions of that politician. In this model, if voters reelect mayors based on their performance and reputation in public office, a mayor whose reputation has been improved in the past may exploit this information asymmetry to later engage in activities seeking special privileges, leaving voters indifferent between reelection and electing an inexperienced candidate. Given these perverse reputation incentives, the model predicts that reelected mayors who have refrained from activities seeking special privileges 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 audits have a substantial short-term disciplinary effect on municipalities. The data show that the release of information from audits leads to improved electoral accountability, reducing the reelection rates of incumbent mayors by 7 percentage points (25%) in municipalities where one instance of corruption was reported, as well as a 14 percentage point reduction in cases where two (or more) instances of corruption were reported.
In contrast to these previously identified short-term effects of audits, observable municipal corruption levels 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 rent-seeking are concentrated among municipalities whose incumbent mayors refrained from rent-seeking activities in the first audit. Estimates indicate that rent-seeking activities increased from 0,55 to 1 standard deviation among municipalities with favorable results in the previous audit, while there is no perceptible change in corruption in municipalities whose incumbent mayors were reported for involvement in corruption in the first case. The results provide empirical support for the argument that short-term disclosure policies do not necessarily align politicians' actions with long-term voter preferences.
Lessons in Public Policy
The study conducted by Bobonis et al. (2010) contributes to the growing body of empirical literature, indicating that the pre-election release of audit reports led to a significant short-term reduction in municipal corruption levels and an increase in the electoral accountability of the incumbent mayor. However, municipal corruption levels in the subsequent term are higher in municipalities audited before the previous election, and these are concentrated among municipalities that refrained from seeking special privileges 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 while 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.
