Working Paper: NBER ID: w17968
Authors: Abhijit Banerjee; Sendhil Mullainathan; Rema Hanna
Abstract: In this paper, we provide a new framework for analyzing corruption in public bureaucracies. The standard way to model corruption is as an example of moral hazard, which then leads to a focus on better monitoring and stricter penalties with the eradication of corruption as the final goal. We propose an alternative approach which emphasizes why corruption arises in the first place. Corruption is modeled as a consequence of the interaction between the underlying task being performed by bureaucrat, the bureaucrat's private incentives and what the principal can observe and control. This allows us to study not just corruption but also other distortions that arise simultaneously with corruption, such as red-tape and ultimately, the quality and efficiency of the public services provided, and how these outcomes vary depending on the specific features of this task. We then review the growing empirical literature on corruption through this perspective and provide guidance for future empirical research.
Keywords: corruption; bureaucracy; public services; task design
JEL Codes: D02; O10; O12; O43
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| bureaucrat's assigned tasks (D73) | corruption (D73) |
| bureaucrat's decisions (D73) | red tape (D73) |
| bureaucrat's decisions (D73) | service quality deterioration (L15) |
| changing bureaucratic tasks (D73) | corruption levels (H57) |
| bureaucratic rules and discretion (D73) | increased waste (L99) |
| providing bureaucrats with a fixed budget and discretion (H61) | reduced waste (L99) |
| providing bureaucrats with a fixed budget and discretion (H61) | reduced corruption (H57) |