CORRUPTION AND INEQUALITY AT THE CROSSROAD

A Multimethod Study of Bribery and Discrimination in Latin America

Brian J. Fried, Paul Lagunes, Atheendar Venkataramani

Latin American Research Review

Motivation

Literature Review

  • bribery assist the poor ( Nye (1967), Scott (1969))

  • inequality of influence (Kaufmann (1997), Hellman & Kaufman (2002), Glaeser et al. (2003), Ferranti et al. (2004)):

    • bribery and socioeconomic status (Rose-Ackerman (1978), Svensson (2003), Nielsen (2006), Fadahunsi & Rosa (2002), Lagunes (2009), Guerrero & Rodríguez-Oreggia (2005), Hunt (2007), Hunt & Laszlo (2006))

Research Question

Research Question

How does corruption interact with inequality?

Research Question

How does corruption interact with inequality?

How do traffic police officers respond to drivers of different income levels?

Research Question

How does corruption interact with inequality?

How do traffic police officers respond to drivers of different income levels?

Why?

Research Design

  • X Variable: Socioeconomic status of the drivers

    1. upper vs. lower class

  • Y Variable: The response of the police officers

    1. Stopped the driver:

    1. Demanded a bribe

    2. Gave a warning

    3. Issue a ticket


Multimethods approach: experiment & interviews

Argument

  • Corruption disproportionately affects the poor
  • Police officers’ bribe tendencies:
    • More likely with lower-class individuals
    • Often let wealthier individuals off
  • Fear of repercussions from wealthier individuals

Experiment

  • 4 drivers (two upper class, two lower class)
  • Mexico City
  • Traffic violations in a randomized sequence of intersections

Results

Results

Interviews: why they might treat individuals differently?

  • 10 officers interviewed by a Spanish speaker with American accent:
    • lack of judiciary support
    • rich has better connections and better understand of the law
    • warning vs. bribe

Conclusions & Implications

  • Mixed methods instead of surveys offer a more precise and context-rich means.

  • Perverse institutions creates environment that promotes corruption.

  • Selective enforcement of the law.

References

Fadahunsi, A., & Rosa, P. (2002). Entrepreneurship and illegality: Insights from the nigerian cross-border trade. Journal of Business Venturing, 17(5), 397–429.
Ferranti, D. de, Perry, G. E., Ferreira, F., & Walton, M. (2004). Inequality in latin america: Breaking with history? World Bank.
Glaeser, E. L., Scheinkman, J., & Shleifer, A. (2003). The injustice of inequality. Journal of Monetary Economics, 50, 199–222.
Guerrero, M. A., & Rodríguez-Oreggia, E. (2005). On the individual decisions to commit corruption: A methodological complement. Universidad Iberoamericana, Mexico City.
Hellman, J. S., & Kaufman, D. (2002). The inequality of influence. World Bank.
Hunt, J. (2007). How corruption hits people when they are down. Journal of Development Economics, 84(2), 574–589.
Hunt, J., & Laszlo, S. (2006). Bribery: Who pays, who refuses, what are the payoffs?
Kaufmann, D. (1997). Corruption: The facts. Foreign Policy, 107, 114–131.
Lagunes, P. (2009). Irregular transparency? An experiment involving mexico’s freedom of information law.
Nielsen, V. L. (2006). Are street-level bureaucrats compelled or enticed to cope? Public Administration, 84(4), 861–889.
Nye, J. S. (1967). Corruption and political development: A cost-benefit analysis. American Political Science Review, 61(2), 417–427.
Rose-Ackerman, S. (1978). Corruption: A study in political economy. Academic Press.
Scott, J. C. (1969). Corruption, machine politics, and political change. American Political Science Review, 63, 1142–1158.
Svensson, J. (2003). Who must pay bribes and how much? Evidence from a cross section of firms. Quarterly Journal of Economics, 118(1), 207–230.