Working Paper: NBER ID: w27225
Authors: Bruce I. Carlin; Tarik Umar; Hanyi Yi
Abstract: A policy of deputization asks agents to monitor others without providing explicit incentives. It is often used to prevent dangerous activities. To calibrate whether and why it works, we study recent laws that deputized financial professionals to help fight elder financial abuse. We show deputization led to a 4%-6% decrease in suspected cases and a 4.5% drop in personal bankruptcies. Women, minorities, and unmarried people benefited more. Effectiveness operated through higher community-mindedness and deeper social connections. Egoistic incentives, legal concerns, publicity, and religiosity were less important. This suggests that regulators can rely on social networks to solve tough problems.
Keywords: No keywords provided
JEL Codes: G28; H31; K23
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| increased community-mindedness and social connectedness (Z13) | identification of suspicious activities (K42) |
| deputization policy (J68) | effectiveness varies by county (H73) |
| stronger social networks (Z13) | success of the deputization policy (J45) |
| deputization policy (J68) | elder financial exploitation (J14) |
| deputization policy (J68) | personal bankruptcies (K35) |