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The Dynamic Effects of Information on Political Corruption: Theory and Evidence from Puerto Rico

Author

Listed:
  • Gustavo J Bobonis
  • Luis R Cámara Fuertes
  • Rainer Schwabe
Abstract
Does the disclosure of information about corrupt activities induce a sustained reduction in corruption? We use publicly released routine audits of municipal governments in Puerto Rico to answer this question. We first develop a political agency model where voters re-elect incumbents based on their performance while in office. We show that, because voters cannot directly observe incumbents’ actions, an incumbent whose reputation improved in the previous term is likely to engage in more rent-seeking activities in a future term. Guided by this model, we use longitudinal data on audit results to examine the long-term consequences of providing information to voters on levels of political corruption. We find that municipal corruption levels in subsequent audits are on average the same in municipalities audited preceding the previous election and those not audited then. In spite of this, mayors in municipalities audited preceding the previous election have higher re-election rates, suggesting that audits enable voters to select more competent politicians. We conclude that short-term information dissemination policies do not necessarily align politicians’ long-term actions with voter preferences as politicians exploit their reputational gains by extracting more rents from office.

Suggested Citation

  • Gustavo J Bobonis & Luis R Cámara Fuertes & Rainer Schwabe, 2011. "The Dynamic Effects of Information on Political Corruption: Theory and Evidence from Puerto Rico," Working Papers tecipa-428, University of Toronto, Department of Economics.
    • Handle: RePEc:tor:tecipa:tecipa-428
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    References listed on IDEAS

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    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Audits of municipal governments and corruption (Puerto Rico)
      by UDADISI in UDADISI on 2013-01-23 16:49:00

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    Cited by:

    1. Ramos, M., 2018. "Estimating the nature of political corruption: evidence from a policy experiment in Brazil," Research Department working papers 1391, CAF Development Bank Of Latinamerica.
    2. De La O, Ana L. & González, Lucas I. & Weitz-Shapiro, Rebecca, 2023. "Voluntary audits: Experimental evidence on a new approach to monitoring front-line bureaucrats," World Development, Elsevier, vol. 162(C).

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    More about this item

    Keywords

    corruption; information; political agency; dynamic incentives;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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