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Measuring Corruption with Parking Tickets

How do you measure the level of corruption in a nation?  Transparency International uses a Perceptions Index to rank the corruption of each nation.  The problem with this index is that it does not give the true corruption of officials, but the resulting corruption from a mix of personal corruption and the effective enforcement of laws.  For instance, government officials in ‘country A’ may be very corrupt and in ‘country B’ the officials may only be somewhat corrupt.  However, if ‘country A’ has strict enforcement of corruption laws, the resulting graft may be lower than ‘country B’ if the later has lax enforcement of its laws.

On NPR’s Marketplace (my favorite radio show), Tim Hartford reviews an NBER working paper by Fisman and Miguel (2006) which uses Diplomatic parking tickets in New York to solve this problem.  In the interview, Mr. Hartford introduces the premise of the paper:

“So you just look at all the diplomats from all the embassies, you see how many parking violations they racked up. You see whether they ever bothered to pay them and, bingo, suddenly you have a measure of personal morality divided up country by country.”

The key point here is that since enforcement of parking laws on diplomats is effectively zero, we have a controlled experiment of which countries are corrupt.  This estimate is made in a setting where the level of law enforcement is the same for each country.  Mr. Hartford gives the results of the study:

“I’m afraid it’s not good news for the view that all humans are created equal. Because ambassadors from the countries that habitually come up as most corrupt, like Chad or Bangladesh, they were also the ambassadors who were committing the largest number of parking violations. So, Chad and Bangladesh, which had very small embassies, not very many staff, they still managed to rack up over eight years 2,500 parking violations. Which is a lot. Then you compare them with, say, the Scandinavians who always come down very low on the scale of corruption . . . All the Scandinavian embassies, which were much bigger, between them managed to rack up 12 parking violations…”

So is there a solution to the problem of corruption?  Mr. Hartford says the paper does give us some hope at the end.

“There was the Clinton-Schumer Amendment in 2002. It meant that, OK, you couldn’t fine people for committing parking violations. But you could, and you would, tow their cars. And you would actually deduct the parking fines from each country’s allocation of foreign aid. So they really started to take a stand on this.

And guess what? Personal morality matters, but enforcing the law matters, too. Because when the amendment was passed, all of these parking violations, by all of these ambassadors, immediately fell by 90 percent. So there is hope for improving the world and stamping out corruption after all.”