Big Bang? An analysis of the determinants of political corruption

• In Event: Political Corruption - Part II

Abstract

What causes corruption? And what explains its temporal consistency? Very few countries in the world seem to have reached low corruption levels; it is safe to claim corruption is endemic in much of the world (Person et al, 2012). In light of this, Bo Rothstein (2011) developed an innovative approach to political corruption, naming it the Indirect Big Bang Approach. In his view, political corruption reflects a collective action problem among ordinary citizens: because the private effort to combat corruption does not bear fruit by itself, and every individual expects other individuals to always tolerate corrupt practices, everyone has a dominant strategy to tolerate and even engage in corruption. Rothstein concludes that this equilibrium can only be changed through an exogenous shock that produces incentives toward collective action resolution. The indirect nature of the approach is because exogenous shocks first affect collective action, and only then affect corruption levels. In order to test this causal path, I claim that shocks on income inequality and education may perform the role described in the Indirect Big Bang Approach. That is because both variables are connected to improvements in social trust and interpersonal cooperation, mechanisms intimately linked to collective action (Putnam, 1993; Rothstein and Uslaner, 2015; Uslaner, 2017). I test this claim by exploiting exogenous variation in education through the presence of conversionary protestant missions (Woodberry, 2012), and in income inequality through the incidence of natural disasters. I operationalize this test through an instrumental variables model for 143 countries.

Author

• Matheus S Cunha