Marginal Revolution: What a great paper, what a blah abstract

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What a great paper, what a blah abstract

Corruption is believed to be a major factor impeding economic development, but the importance of legal enforcement versus cultural norms in controlling corruption is poorly understood. To disentangle these two factors, we exploit a natural experiment, the stationing of thousands of diplomats from around the world in New York City. Diplomatic immunity means there was essentially zero legal enforcement of diplomatic parking violations, allowing us to examine the role of cultural norms alone. This generates a revealed preference measure of government officials' corruption based on real-world behavior taking place in the same setting. We find strong persistence in corruption norms: diplomats from high corruption countries (based on existing survey-based indices) have significantly more parking violations, and these differences persist over time. In a second main result, officials from countries that survey evidence indicates have less favorable popular views of the United States commit significantly more parking violations, providing non-laboratory evidence on sentiment in economic decision-making. Taken together, factors other than legal enforcement appear to be important determinants of corruption.

Here is the paper. I might have tried the following:

During a period of diplomatic parking immunity, the average Kuwaiti diplomat to the United Nations racked up 246 parking violations. No Swedish diplomat had any parking violations. This paper explores how that might possibly be the case.

Posted by Tyler Cowen on July 6, 2006 at 04:43 AM in Political Science | Permalink

Comments

Is it obvious that this paper tracks willingness to be corrupt? What if instead the authors had looked at the number of speeding violations these diplomats committed? At least in that case it seems more intuitive to me that you'd be probing differing traffic norms as well as differing levels of significance attached to strict adherence to formal rules. Neither of these is at all the same as corruption.

Posted by: D at Jul 6, 2006 6:42:52 AM

It is now behind a wall, but Fisman had a short article based on this paper in Forbes a few months back:
http://www.forbes.com/forbes/2006/0522/040.html

Here is a part of the article (somewhat better then the paper abstract):

"A certain amount of corruption is grounded in culture and immune to carrots and sticks.

Scandinavian countries, which perennially rank among the least corrupt in the corruption index, had the fewest unpaid tickets. There were just 12 from the 66 diplomats from Finland, Norway, Denmark and Sweden. Almost all of these tickets went to one bad Finn.

Chad and Bangladesh, at the bottom of the corruption index, were among the worst scofflaws. They shirked 1,243 and 1,319 tickets, respectively, in spite of the fact that their UN missions were many times smaller than those of the Scandinavians.

In fact, there is a remarkable concordance between the number of unpaid violations and a country's corruption ranking. This strongly suggests that one's background and experiences, what we might call culture, does indeed contribute to bad behavior. "

Fisman also has a neat paper on estimating the value of political connections:
http://www1.gsb.columbia.edu/mygsb/faculty/research/pubfiles/1597/estimating%5Fthe%5Fvalue%2Epdf

Posted by: Pa. at Jul 6, 2006 7:48:25 AM

Those hostile to the US tend to be corrupt, whatever the cause. Interesting.

Posted by: aaron at Jul 6, 2006 8:25:03 AM

What this research measures is the extent to which members of each country's elite class are willing to break the law if they know they can get away with it. Those who are most willing to break the law are the most likely to engage in corruption. But they are also the most likely to see democracy and the rule of law as threats to their own position. Hence, they are most likely to see the spread of American influence and values as dangerous.

Posted by: Andrew Zalotocky at Jul 6, 2006 9:03:20 AM

Does the paper also look at car-ownership rates? Driving in Bangladesh is not like driving in New York.

There is a similar situation regarding diplomatic payment of London's congestion charge. All embassies are supposed to pay but it is not enforceable so some do and some don't. Interestingly the US is one of the relatively few non-payers.

Posted by: Jack at Jul 6, 2006 9:23:37 AM

Finns ain't wot they used to be.

Posted by: dearieme at Jul 6, 2006 10:30:28 AM

One factor that this study does not seem to account for is the degree of
internal accountability each mission imposes upon its diplomats.

If one Mission requires its personnel to pay tickets levied by New York
City (or face administrative penalties imposed by the home country
bureaucracy), while another Mission imposes no such cost, that would
change outcomes (although it would still say something interesting about
corruption and political and institutional cultures that tolerate or
refuse to tolerate impunuty.

Posted by: Manuel Belgrano at Jul 6, 2006 11:50:34 AM

Yours is good, but doesn't seems too terse. You need to say something about the basic stuff in the paper, so let me try.

Corruption is believed to be an impediment to economic development. Economic and sociological theory predicts culture and legal enforcement can mitigate corruption, but given the endogeneity involved, this has proven illusive. To disentangle the two factors, we exploit a natural experiment in New York City involving delinquent parking tickets. Foreign diplomats are protected from enforcement of traffic crimes, thus allowing us to observe the role of cultural enforcement in home countries. We find strong persistence in corruption norms. Diplomats from high corruption countries (based on separate survey-based indices) have significantly more parking violations which persist over time. Secondly, officials from countries that have less favorable popular opinions of the United States are more likely to to commit parking violations. Taken together, factors other than legal enforcement appear to be important determinants of corruption.

Posted by: jason voorhees at Jul 6, 2006 12:14:31 PM

Might there also be a correlation to time management? As in: diplomats in countries where promptness is valued will budget more time for finding parking and vice versa. I suppose it could be flipped right around as well...

Posted by: Klug at Jul 6, 2006 3:38:51 PM

"A certain amount of corruption is grounded in culture and immune to carrots and sticks."

The second part of this sentence from the paper is ridiculously overstated. A more defensible claim is that there is strong cultural influence on corruption and hence that responses to opportunities for corruption only change slowly over time (i.e. corruption levels are 'sticky' and don't change easily).

I think that, to explain various cultural responses, we need a better understanding of mulitple equilibria in game theory and how societies transition between equilibria. Cold northern places such as Sweden have managed to reach strong cooperative equilibria, perhaps because the risk of freezing to death or starving during a long winter makes one more anxious to cooperate with neighbors.

After all, in a society in which everyone else is corrupt, it seems foolish not to be corrupt also. But the non-corrupt equilibrium may be the best joint solution - it's a sort of prisoner's dilemma.

It's possible to change a culture to reduce corruption, but it takes a long time. One example is Hong Kong, which was extremely corrupt in the 1960s and 1970s but then took strong measures to reform. The Independent Commission Against Corruption (ICAC) was given strong powers, but much of what they did to change the culture involved public relations campaigns, including commercials and made-for-TV movies (in cooperation with TVB, a local station) dramatizing corruption cases. It probably took a couple of decades (a generation), but corruption was dramatically reduced.

I think that some of the nanny-state approach of Singapore is an attempt to quickly move to a cooperative equilibrium.

Corruption is not immune to carrots and sticks in the long run, but people don't recalculate their entire world view every day. One must start with some priors, and it takes time for enough evidence to mount up to shift them.

Posted by: Ann Sherman at Jul 6, 2006 7:12:59 PM

I am employed at UN headquarters in New York, and see this all the time. I think the paper is intellectualizing the obvious.

Where the rule of law is not respected in the home country, diplomatic personnel tend to ignore local regulations - wherever they may be stationed. Where the rule of law is respected in the home country, diplomatic personnel are more likely to abide by local regulations.

The more interesting question, it seems to me, is how the strength of the rule of law in any particular nation vs. other nations may influence that nation's geopolitical, economic, or social ties with other nations.

Posted by: John Fembup at Jul 6, 2006 10:54:57 PM

I am not so sure this measures corruption. Since everyone knows diplomats do not have to pay their tickets,
I would say no corruption is involved. Rather, I think this measures fairness or a belief in equality. The
Swedish diplomat recognizes the unfairness of getting away with a law violation (I know this is similar to
corruption) and the Kuwaiti either does not recognize this or does not care. The Swede sees something wrong
in his being treated better than the common man while the Kuwaiti expects this.

Posted by: China Law Blog at Jul 7, 2006 3:59:06 AM

Kuwait and Oman are at opposite ends of the table despite many apparent similarities.

Since the visible incentives are identical for all diplomats, looking at this from an "incentives matter" angle makes it clear how subtle the incentives that matter can be.

If there is a link between a cavalier attitude to rules of social cooperation and corruption, which is cart and which is horse? How does this square with libertarian ideas that state enforced laws are generally corrupting? Are Scandinavian levels of compliance inefficient? Is culture viewed as some essential difference really be relevant when peoples that were formerly Vikings are now ultra law abiding?

Posted by: Jack at Jul 7, 2006 5:33:38 AM

Wow! Most of you folks are attending too many "workshops" and "break-out" sessions - it ain't rocket science people.

Most behaviors can be explained by observing fifth graders or 10 year-olds in elementary school. The whole of societal behaviors can be explained by this simple obeservation. One group of students almost always follows the rules even in the absence of rules; meaning that it has a strong sense of what is right, what is wrong, and what is fair. The second group, generally, will follow the rules but, more times than not, only when a teacher is watching or supervising. The last group rarely follows the rules and relishes in the fact it breaks the rules openly. Group one and two avoid this group as do the teachers, unless it demonstrablly encroaches upon the dynamics of the first two groups. Group three hates group one but influences group two. Each of those groups is a product of its home environment - ordinarily, a quick assessment can be made to the group a particular child belongs after the first parent conference.

With respect to the creation of rules, rules are made for the second group, because that group can be controlled with reasonable corrective measures and supervision. The third group is more difficult to control and rules do not apply to them and more drastic measures to control them are sometimes taken - even when it has not broken a rule, this group is almost always out of control. It is, generally, ignored until it begins to greatly affect the first two groups - short of this, the third group stays to itself and is left to its own devices. The third group knows that. Finally, the first group is comprised of students who, as adults, will stop at stop signs, even at midnight on a deserted street. It requires no rules. Almost always, as adults, it makes the rules to control the second group hoping to prevent the influence of group three on group two. It will only engage the third group when there is no alternative but to confront their rash of infectious rule breaking. Group three's behavior cannot be changed only controlled.

The dynamics of the world's nations operates in the same way and the "ticket statistics" make this, generally, evident. Many of the offending countries, generally, are purposely ignored in world politics - like the third group of students in school. Only when those countries demonstrablly disrupt the first two groups of countries will it be harshly confronted - and the third group of countries knows that. In the absence of diplomatic immunity, those countries would continue to violate the laws and ignore fines; the other countries let them get away with it, because it is insignificant to the dynamics of the first two groups. Obviously, the third group of countries behave this way at home (and at school) and nobody cares until it begins to infect the second group of countries and spill into the first group of countries. The third group of countries' behavior cannot be changed only controlled, otherwise we let it get away with rule breaking - and it knows that.

But what do I know?

Posted by: Mike at Jul 9, 2006 12:39:41 AM

What's wrong with the more traditional analysis - everyone is simply maximizing, but groups like the Swedes do so with fewer tickets, because they value their view of themselves as law-abiding more than they do the opportunity to allow less time for commuting and getting to one's meeting on time.

Posted by: Susan at Jul 10, 2006 10:09:29 AM

Mike -

Your analysis is interesting, but it still leaves questions. I believe that, if there are these three groups that are born that way, then members from each group are born in each country (i.e. I don't believe that genetically, some racial or ethnic groups are born as primarily 'group 1' while others are born predominantly 'group 3').

So how did 'group 3' members end up controlling some countries but not others? And perhaps more importantly, how can we help 'group 1' or at least 'group 2' people get control in those countries?

Posted by: Ann at Jul 10, 2006 10:14:46 AM

Ann: It's not genetic or racial, of course. It's cultural/environmental. If your country is highly corrupt, then you will more than likely be raised by people who are corrupt, are close to corruption, or see it all the time. Obviously, just as that naughty Finn showed, you can break the mold, but people tend not to.

As to the question of "why did they become corrupt in the first place?" the question is one for history and the current laws of the country. I believe that the majority of the people fall into the "group 2" spectrum, as defined above. It's probably radically different for each country.

Perhaps their modern society was founded by extremely familial oriented feudal clans, where nepotism and graft were considered the perks of being in charge. This is now ostensibly "illegal" but is accepted by peasant and king alike as part of the system. Perhaps they were lorded over by colonial rulers, who exploited them ruthlessly -- and they wrested power away from them without developing a countervailing sense of justice and fairness. Now they exploit their countrymen just as badly. Perhaps they are an ex-socialist/communist country, still trying to eliminate the attendant corruption of that system.

Interesting not from a public policy perspective, but from a psychological one, what are the rates of violations of the diplomats in NY vs in their own countries? Do they behave there, where their peers can see, and go crazy in NY? Or do they try to maintain a respectable facade when meeting foreigners?

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