Essays on Corruption: The Role of Information, Beliefs and Incentives

Abstract

It is well acknowledged that corruption is rampant in low-income countries. However, there is a less than ideal propensity to take action against it. Lack of information is one important factor that might explain why citizens don’t take an initiative to fight against it. Another important issue is citizens’ ability to co-ordinate with each other to reduce corruption. This implies that when individuals decide to take an action, they need to have some knowledge about whether and how others are going to act, since the success or failure of many anti-corruption efforts depend on individual actors being able to co-ordinate. The first essay addresses the importance of these two channels in context of anti-corruption actions. Building on the same context, the second essay posits that the drive to take actions against corruption might be strong when major crisis or disaster is fresh in the memory, thereby making it more personal. A period of crisis heightens public attention- a fact that is not lost on politicians / public officials. The third essay explores the delivery of a public good in the context of a period when there is heightened public attention during the electoral term of an incumbent politician. Anticipating such behavior from the public, politicians might time their actions in a way that would be more rewarding or to their advantage. Through the third essay, we empirically test if such a manipulation can be detected in the provision of an important public good, both in terms of its quantity and quality. In the first essay, we conduct an online experiment to test whether increasing awareness of corrupt practices and/or updating beliefs about others willingness to take action against corruption affects individuals’ own anti-corruption efforts in the health sector during the ongoingCOVID-19 pandemic. Subjects from India are randomized into three treatment groups. In the first treatment, subjects are exposed to increased awareness about corruption. In the second,we correct their misaligned beliefs about others’ willingness to stand up against corruption and in the third treatment, subjects are exposed to both increased awareness and belief correction. Within each treatment group we randomly assign subjects to different anti-corruption actions that vary in their private costs and expected benefits. Our results indicate that our treatments’ impact on subjects’ personal decision to act depends on the relative costs and benefits of anti-corruption actions. In the second essay, we exploit the unexpected occurrence of a health crisis to answer if critical junctures drive citizens’ motivation to fight corruption. We elicit perceptions about corruption in the health sector and the willingness to act against it in an online survey, conducted with nearly 900 men during the height of the second wave of the COVID-19 pandemic in India between March and July 2021. We assess how these measures changed with the severity of the pandemic during this period, using both real-effort and hypothetical measures of citizen activism. We find a significant surge in the proportion of respondents agreeing to participate in protests after the COVID-19 peak, as well as in the willingness to take anti-corruption actions. Furthermore, we observe a substantial increase in subjects’ perception of corruption and their level of information on citizen rights and entitlements during the same period. The evidence,therefore, suggests that the second wave of the pandemic not only acted as a focal point leading to greater willingness to act, but it also increased the probability of citizens taking an anti-corruption action. In the final essay, we analyze the incentive of politicians to engage in corrupt behavior- specifically through their predisposition to adjust policies in systematic ways - around elections in India. We leverage a nationwide road program covering 150,000 roads from 18 large Indian states to demonstrate the presence of election cycle progressively through different stages of program implementation over two decades. Through heterogeneity analysis, we document that politicians are more likely to increase project sanctions in areas with low literacy, but not subsequently improve project award and completion. Additionally, re-election chances are positively correlated with increase in project awards, but tighter electoral competition is unlikely to explain the continuance of electoral cycle in this program; rather, it acts as a force of scrutiny, likely increasing the efficiency of road delivery around elections.