Corruption vs reforms: Why do voters prefer the former?

Fedotenkov, Igor (2018): Corruption vs reforms: Why do voters prefer the former?

Abstract

In this paper, we address the question of why voters tolerate corrupt politicians. Standard economic techniques such as expected utility maximization under uncertainty are employed. We show that a corrupt politician is less likely to institute reforms which can cause short-term losses for voters during a transitional period or lead with some probability to non-success. Voters' higher risk aversion causes an increased fear of reforms and higher tolerance for corruption. We also show that during an economic crisis the corruptionists' optimal strategy is not to institute reforms, as models with honest politicians predict, but to reduce the level of corruption. Using panel data techniques, we show that such a strategy is in line with the empirical CIS data; however, it follows with a short delay.

• Item Type: MPRA Paper
• Language: English
• Keywords: Corruption; politician; median voter; reforms; risk aversion
• Subjects: D - Microeconomics > D7 - Analysis of Collective Decision-Making > D72 - Political Processes: Rent-Seeking, Lobbying, Elections, Legislatures, and Voting Behavior; D - Microeconomics > D7 - Analysis of Collective Decision-Making > D73 - Bureaucracy ; Administrative Processes in Public Organizations ; Corruption; D - Microeconomics > D7 - Analysis of Collective Decision-Making > D79 - Other; E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook > E60 - General; I - Health, Education, and Welfare > I3 - Welfare, Well-Being, and Poverty > I38 - Government Policy ; Provision and Effects of Welfare Programs; O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O43 - Institutions and Growth

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