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Do Freedom of Information Laws Decrease Corruption?
Samia Costa
Journal of Law, Economics, and Organization, forthcoming
Abstract:
International organizations have encouraged countries to adopt Freedom of Information (FOI) laws as a means to increase transparency and thus combat corruption. This article uses the recent introduction of FOI laws in several countries as a natural experiment to determine their effect on corruption perceptions and the quality of governance. Using different corruption perception indices, both at the macro- and micro-level, I find that countries that adopted FOI laws saw an increase in perceived corruption and a decrease in the quality of governance, rather than the expected improvement. This increase in corruption perception seems to take place in the initial years of the reform, with no significant decrease in the long term. Countries with a free press appear to be the ones experiencing the increase. Results are robust throughout different samples and specifications.
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Eric Zitzewitz
Journal of Sports Economics, forthcoming
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Transparency is usually thought to reduce favoritism and corruption by facilitating monitoring by outsiders, but there is concern it can have the perverse effect of facilitating collusion by insiders. In response to vote trading scandals in the 1998 and 2002 Olympics, the International Skating Union (ISU) introduced a number of changes to its judging system, including obscuring which judge issued which mark. The stated intent was to disrupt collusion by groups of judges, but this change also frustrates most attempts by outsiders to monitor judge behavior. The author finds that the "compatriot-judge effect," which aggregates favoritism (nationalistic bias from own-country judges) and corruption (vote trading), actually increased slightly after the reforms.
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How Censorship in China Allows Government Criticism but Silences Collective Expression
Gary King, Jennifer Pan & Molly Roberts
Harvard Working Paper, June 2012
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We offer the first large scale, multiple source analysis of the outcome of what may be the most extensive effort to selectively censor human expression ever implemented. To do this, we have devised a system to locate, download, and analyze the content of millions of social media posts originating from nearly 1,400 different social media services all over China before the Chinese government is able to find, evaluate, and censor (i.e., remove from the Internet) the large subset they deem objectionable. Using modern computer-assisted text analytic methods that we adapt and validate in the Chinese language, we compare the substantive content of posts censored to those not censored over time in each of 95 issue areas. Contrary to previous understandings, posts with negative, even vitriolic, criticism of the state, its leaders, and its policies are not more likely to be censored. Instead, we show that the censorship program is aimed at curtailing collection action by silencing comments that represent, reinforce, or spur social mobilization, regardless of content. Censorship is oriented toward attempting to forestall collective activities that are occurring now or may occur in the future --- and, as such, seem to clearly expose government intent, such as examples we offer where sharp increases in censorship presage government action outside the Internet.
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Shane Greenstein & Feng Zhu
American Economic Review, May 2012, Pages 343-348
Abstract:
This study empirically examines whether Wikipedia has a neutral point of view. It develops a method for measuring the slant of 28 thousand articles about US politics. In its earliest years, Wikipedia's political entries lean Democrat on average. The slant diminishes during Wikipedia's decade of experience. This change does not arise primarily from revision of existing articles. Most articles arrive with a slant, and most articles change only mildly from their initial slant. The overall slant changes due to the entry of articles with opposite slants, leading toward neutrality for many topics, not necessarily within specific articles.
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"Under the Weather": The Weather Effects on U.S. Newspaper Coverage of the 2008 Beijing Olympics
Bu Zhong & Yong Zhou
Mass Communication and Society, July/August 2012, Pages 559-577
Abstract:
By using computer-aided content analysis, this study examined how Beijing's weather, which was measured by the Air Pollution Index (API), temperature, and cloudiness (sunny or cloudy), might influence the coverage of the 2008 Beijing Olympics by 4 U.S. newspapers. The results demonstrated that the API and temperature were significantly related to the negativity of the news reports that were filed from Beijing. Specifically, as Beijing's temperature rose or air pollution level increased, U.S. journalists used more negative words in reporting on the Olympics. The temperature was also correlated with the negativity of China-related reports. The findings provided evidence that journalists' news decision making might be influenced by a greater variety of factors than we previously thought. To better understand how journalists make news decisions, it is necessary to explore not only known patterns of journalistic practices but also some exogenous factors, such as weather.
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James Westphal et al.
Administrative Science Quarterly, forthcoming
Abstract:
In this study, we examine the determinants and consequences of impression management (IM) support in communications between CEOs and journalists, whereby CEOs of other firms provide positive statements about a focal CEO's leadership and strategy and/or external attributions for low performance at the focal CEO's firm. Drawing from social exchange theory, our theoretical perspective suggests how IM support may result from norms of reciprocity among corporate leaders. We consider the potential for direct and generalized reciprocity in the provision of IM support, including generalized reciprocity in which CEOs who received IM support previously pay the support forward to another third-party CEO, and a second form of generalized reciprocity in which CEOs reciprocate IM support to fellow CEOs whom they believe have given similar support to other CEOs in the past. We also draw from the social psychological literature on persuasion to suggest why IM support for another CEO may have a more positive influence on the tenor of journalists' coverage about the firm's leadership than impression management by the CEO about his or her own leadership and strategy. We test our hypotheses with data from large and mid-sized public U.S. companies from 1999 to 2007, including original survey data from a large sample of CEOs and journalists. The results supported our hypotheses, and additional findings suggested that the apparent effects of impression management by leaders and staff about their own firms following a negative earnings surprise may be partially attributable to the effects of IM support.
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Transparency, Appropriability and the Early State
Joram Mayshar, Omer Moav & Zvika Neeman
Hebrew University of Jerusalem Working Paper, February 2012
Abstract:
We propose a general theory that explains the extent of the state and accounts for related institutions as byproducts of the state's extractive capacity. We posit further that this capacity is determined by the transparency of the production technology. First, we apply our proposed theory in identifying the link between the Neolithic Revolution and the emergence of the state. We argue that the common explanation that emphasizes the availability of food surplus is flawed, for it ignores Malthusian considerations. In contrast, we suggest that what led to the emergence of the state was the greater transparency of farming. Second, we show that variations across regions in the transparency of the production processes can explain differences in institutions, such as land tenure, and in the scale of the state. We then apply our theory to explain the institutional features that distinguished ancient Egypt from ancient Mesopotamia.
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The Performance Effects of Regulatory Oversight
Stan Veuger & Kristin Wilson
Harvard Working Paper, November 2011
Abstract:
This paper explores how firms can gain a competitive advantage by making their regulators a part of their strategic network. We use data on the performance of all U.S. commercial banks between 2001 and 2009 to show that banks located closer to their examination field offices face lower supervision costs: a two-hour difference in examiner travel time corresponds to an increase in expense levels of 1 to 2 percent of capital that are not explained by leverage. In addition, greater supervisor distance is not associated with increased returns derived through higher interest margins, but is associated with deteriorating portfolio performance. This suggests that regulatory oversight is not purely a burden or a mechanism for bureaucratic rent extraction, but that closer ties with supervisors bring advantages to firms. We hypothesize that these advantages accrue due to co-located banks' lower costs of information exchange, particularly the exchange of soft information and supervisory expertise. In support of this conjecture, we find that small banks benefit disproportionately from proximity to their supervisor. The effect is not reduced over time, implying that relationships, rather than the cost of actual physical information transmission, drives the effect. Lastly, we find that the financial crisis triggered a more aggressive regulatory stance that eliminated the benefits from proximity completely, which is consistent with a view of supervisors as risk-averse agents. All in all, if management of knowledge and other internal resources is the core of a firm's competitive capability, its ability to effectively engage with its regulatory environment is certainly a significant part of that core.
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Unwillingness to pay for privacy: A field experiment
Alastair Beresford, Dorothea Kübler & Sören Preibusch
Economics Letters, October 2012, Pages 25-27
Abstract:
We measure willingness to pay for privacy in a field experiment. Participants bought at most one DVD from one of two competing online stores. One store consistently required more sensitive personal data than the other, but otherwise the stores were identical. In one treatment, DVDs were one Euro cheaper at the store requesting more personal information, and almost all buyers chose the cheaper store. Surprisingly, in the second treatment when prices were identical, participants bought from both shops equally often.
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Avi Goldfarb & Catherine Tucker
American Economic Review, May 2012, Pages 349-353
Abstract:
This paper explores how digitization and the associated use of customer data have affected the evolution of consumer privacy concerns. We measure privacy concerns by reluctance to disclose income in an online marketing research survey. Using over three million responses over eight years, our data show: (1) Refusals to reveal information have risen over time, (2) Older people are less likely to reveal information, and (3) The difference between older and younger people has increased over time. Our results suggest that the trends over time are partly due to broadening perceptions of the contexts in which privacy is relevant.
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The Electoral consequences of Voter Ignorance
Jason Ross Arnold
Electoral Studies, forthcoming
Abstract:
A great deal of research has suggested that scholarly and popular concerns about low levels of citizen political knowledge are exaggerated. One implication of that research is that political history would have unfolded just as it did even if electorates had been more politically informed. This paper presents evidence that counters these claims, showing an infusion of electorally relevant information in twenty-seven democracies would have likely led to a lot of vote "switching", ultimately changing the composition of many governments. The paper also directly and systematically examines what we might call the "enlightened natural constituency" hypothesis, which expects lower-income citizens to vote disproportionately for left parties once armed with more political knowledge. While the basic argument about how political ignorance disproportionately affects the left's natural constituency is not new, the hypothesis has thus far not been tested. The analysis provides provisional support for the hypothesis.
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A Failure of Representative Democracy
Katherine Baldiga
Harvard Working Paper, January 2012
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In this paper, we study representative democracy, one of the most popular classes of collective decision-making mechanisms, and contrast it with direct democracy. In a direct democracy, individuals have the opportunity to vote over the alternatives in every choice problem the population faces. In a representative democracy, the population commits to a candidate ex ante who will then make choices on its behalf. While direct democracy is normatively appealing, representative democracy is the far more common institution because of its practical advantages. The key question, then, is whether representative democracy succeeds in implementing the choices that the group would make under direct democracy. We find that, in general, it does not. We analyze the theoretical setting in which the two methods are most likely to lead to the same choices, minimizing potential sources of distortion. We model a population as a distribution of voters with strict preferences over a finite set of alternatives and a candidate as an ordering of those alternatives that serves as a binding, contingent plan of action. We focus on the case where the direct democracy choices of the population are consistent with an ordering of the alternatives. We show that even in this case, where the normative recommendation of direct democracy is clear, representative democracy may not elect the candidate with this ordering.
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Do Newspapers Serve the State? Incumbent Party Influence on the US Press, 1869-1928
Matthew Gentzkow et al.
NBER Working Paper, June 2012
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Using data from 1869-1928, we estimate the effect of party control of state elected offices on the entry, exit, circulation, and content of Republican and Democratic daily newspapers. We exploit changes over time in party control of the governorship and state legislatures in a differences-in-differences design. We also present regression-discontinuity estimates based on the outcomes of close gubernatorial elections and state legislatures with small majorities. Our main estimates show no evidence that incumbent governments influence the press, and are precise enough to rule out modest effects. Estimates for politically significant times and places where we would expect the scope for government intervention to be relatively large also show little evidence of influence. The one exception is the post-Reconstruction South, an episode that we discuss in detail.
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Was There a Real "Mineshaft Gap"?: Bomb Shelters in the USSR, 1945-1962
Edward Geist
Journal of Cold War Studies, Spring 2012, Pages 3-28
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During the Cold War, the nature, intent, and scale of Soviet civil defense were the subject of heated debate in the West. Some analysts claimed that the USSR possessed a massive civil defense program capable of seriously destabilizing the strategic nuclear balance. This article draws on previously unexamined archival sources to investigate Soviet shelter construction from 1953, when the USSR's civil defense forces began planning for nuclear war, until the Cuban missile crisis in October 1962. These documents indicate that shelter construction consumed the majority of Soviet civil defense funding and was conducted by order of the Council of Ministers. Although the shelters were inadequate both technologically and quantitatively to protect the Soviet population from an all-out U.S. thermonuclear attack, they existed in significant numbers and represented a considerable expenditure of limited Soviet resources. These new revelations provide important insights into Soviet thinking about nuclear war during the Khrushchev era.
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Markets as a structural solution to knowledge-sharing dilemmas
Boris Maciejovsky & David Budescu
Organizational Behavior and Human Decision Processes, forthcoming
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The authors propose a new structural solution to the knowledge-sharing dilemma. They show that simple auction mechanisms, which impose a rigid set of rules designed to standardize interactions and communication among participants, can prevent some of the detrimental effects associated with conflict of interest in freely interacting groups. The authors report results of two experiments that show that transparent conflicts of interest lead to a breakdown of information sharing, learning, and knowledge transfer in freely interacting groups, but not in simple markets and auctions. In these settings, participants were able to identify the best candidate in a voting game and to learn the solution to an intellective reasoning task, allowing participants to successfully transfer their insights to a series of new intellective tasks (tackled up to four weeks later), despite the conflicts of interests among traders. The authors explain their findings within the theoretical framework of collective induction.
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The Ford Foundation and the Rise of Behavioralism in Political Science
Emily Hauptmann
Journal of the History of the Behavioral Sciences, Spring 2012, Pages 154-173
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How did behavioralism, one of the most influential approaches to the academic study of politics in the twentieth century, become so prominent so quickly? I argue that many political scientists have either understated or ignored how the Ford Foundation's Behavioral Sciences Program gave form to behavioralism, accelerated its rise, and helped root it in political science. I then draw on archived documents from Ford as well as one of its major grantees, U. C. Berkeley, to present several examples of how Ford used its funds to encourage the behavioral approach at a time when it had few adherents among political scientists.
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Private Returns to Public Office
Raymond Fisman, Florian Schulz & Vikrant Vig
NBER Working Paper, May 2012
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We study the wealth accumulation of Indian parliamentarians using public disclosures required of all candidates since 2003. Annual asset growth of winners is on average 3 to 6 percentage points higher than runners-up. By performing a within-constituency comparison where both runner-up and winner run in consecutive elections, and by looking at the subsample of very close elections, we rule out a range of alternative explanations for differential earnings of politicians and a relevant control group. The ``winner's premium" comes from parliamentarians holding positions in the Council of Ministers, with asset returns 13 to 29 percentage points higher than non-winners. The benefit of winning is also concentrated among incumbents, because of low asset growth for incumbent non-winners.
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Does It Pay to Be a Cadre? Estimating the Returns to Being a Local Official in Rural China
Jian Zhang, John Giles & Scott Rozelle
Journal of Comparative Economics, forthcoming
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Recruiting and retaining leaders and public servants at the grass-roots level in developing countries creates a potential tension between providing sufficient returns to attract talent and limiting the scope for excessive rent-seeking behavior. In China, researchers have frequently argued that village cadres, who are the lowest level of administrators in rural areas, exploit personal political status for economic gain. Much existing research, however, compares the earnings of cadre and non-cadre households in rural China without controlling for unobserved dimensions of ability that are also correlated with success as entrepreneurs or in non-agricultural activities. The findings of this paper suggest a measurable return to cadre status, but the magnitudes are not large and provide only a modest incentive to participate in village-level public administration. The paper does not find evidence that households of village cadres earn significant rents from having a family member who is a cadre. Given the increasing return to non-agricultural employment since China's economic reforms began, it is not surprising that the return to working as a village cadre has also increased over time. Returns to cadre-status (such as they are) are derived both from direct compensation and subsidies for cadres and indirectly through returns earned in off-farm employment from businesses and economic activities managed by villages.
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Does Increased Civil Service Pay Deter Corruption? Evidence from China
Ting Gong & Alfred Wu
Review of Public Personnel Administration, June 2012, Pages 192-204
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The temporal persistence and geographical prevalence of corruption in the world have provoked a vast amount of research into its causes. Low civil service remuneration, especially in less developed nations, is believed to be an important contributing factor to corruption. The assumption is that when salaries are low but expectations for service remains high, government officials may demand more compensation from informal or even illegal channels than what is officially sanctioned; hence, corruption arises. Accordingly, increased pay level is assumed to be effective in deterring corruption. Using China as a case, we argue that the relationship between civil service pay and corruption is not as simple as suggested. The empirical evidence gathered from China casts doubt on the assumed connection between the two to debunk the myth that increasing civil service pay contributes to the control of corruption. The article also presents the policy implications of the above analysis for human resource management and civil service governance.
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Dinissa Duvanova
British Journal of Political Science, July 2012, Pages 573-596
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While theoretical arguments distinguish regulatory policies from the institutional mechanisms of their implementation, empirical accounts often conflate the official regulatory policies of the government with the unofficial regulatory burden emanating from corruption and red tape. Building on the literature that emphasizes a separate and non-trivial effect of regulatory enforcement, this article identifies bureaucratic discretion as an important institutional factor that conditions the effects of regulatory policy on the business environment. An analysis of cross-sectional data covering 119 economies demonstrates that, under high levels of bureaucratic discretion, state regulatory involvement has no effect on the business environment. Low levels of bureaucratic discretion, however, accentuate the link between light regulatory burden and a business-friendly economic environment.
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Bureaucratic Discretion, Business Investment, and Uncertainty
Quintin Beazer
Journal of Politics, forthcoming
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What determines whether policy environments attract or deter investment? Scholars worried about the vulnerability of market-supporting institutions to political manipulation have identified delegation to independent actors as way to increase policy environments' predictability. Extant arguments, however, risk overgeneralizing from the experience of developed democracies. I argue that investors' response to bureaucratic discretion - agents' leeway to make decisions and act independently of political bodies - depends upon the broader institutional context. Where robust political institutions are lacking, bureaucratic discretion acts as a source of unpredictability that deters investors; conversely, political institutions that share the cost of monitoring help to mitigate uncertainty about how bureaucrats will use discretion in applying regulatory rules. Using survey data from over 600 enterprises in Russia, I find that perceptions of bureaucratic discretion are negatively associated with firm managers' willingness to invest; this effect is particularly pronounced in regions where the institutional environment discourages political competition.
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Uncertainty resolution in tax experiments: Why waiting for an audit increases compliance
Stephan Muehlbacher et al.
Journal of Socio-Economics, June 2012, Pages 289-291
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Tax compliance in a between-subjects experiment was higher when the uncertainty about the occurrence of an audit was not resolved until three weeks after participants had filed their tax returns than in a control treatment with immediate uncertainty resolution. Results have important implications for experimental tax research where providing immediate feedback whether participants are audited is common practice.
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Corruption control in the United States: Law, values, and the political foundations of reform
Michael Johnston
International Review of Administrative Sciences, June 2012, Pages 329-345
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The United States is generally regarded as more successful than most other societies at controlling corruption. But how accurate is that picture? I argue that corruption control in the US is more problematical than index scores suggest. Much corruption in the United States flies beneath the radar; while legal institutions are credible the United States often ‘controls' abusive uses of wealth by removing restrictions that elsewhere are the focus of corruption. That strategy may reduce high-level bribery, but major questions of justice and accountability remain. In liberal democracies such as the US, whose corruption can be seen as ‘influence markets', value-based controls, many applied through political processes, are crucial. If the political order is perceived by most citizens as inherently corrupt, those kinds of controls may be seriously undermined.
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Peter Fretwell
Significance, June 2012, Pages 4-7
Abstract:
Studying emperor penguins used to be a job for heroes. But penguins leave traces; thanks to high-resolution satellites they can waddle but they cannot hide. Peter Fretwell comes in from the cold to find that penguin numbers are much higher than we thought.