27 February 2007
Today we continue our voyage in the treasure quest for identification in observational studies. After our sojourn in Spain two weeks ago, the next stopover is in Brazil, where in a recent paper Claudio Ferraz and Frederico Finan discovered a nice natural experiment that allows to estimate the effect of transparency on political accountability. Many in the policy world are agog over the beneficial impact of transparency on good governance. Yet, empirical studies of this subject are often bedevilled by selection problems for obvious reasons. Ideally, we would like to find a situation in which changes in transparency are randomly assigned, which (also for obvious reasons) tends to be a low probability event. But is does happen. Turns out that in a recent anti-corruption program in Brazil, the federal government randomly audits 60 municipalities every month and then discloses the findings of the report to the municipality and the media. The authors exploit this variation and find that the dissemination of information on corruption, which is facilitated by media, does indeed have a detrimental impact on the incumbent’s electoral performance.
Here is the abstract of the paper:
Exposing Corrupt Politicians: The Effects of Brazil’s Publicly Released Audits on Electoral
This paper examines whether access to information enhances political accountability. Based upon the results of Brazil’s recent anti-corruption program that randomly audits municipal expenditures of federally-transferred funds, it estimates the effects of the disclosure of local government corruption practices upon the re-election success of incumbent mayors. Comparing municipalities audited before and after the elections, we show that the audit policy reduced the incumbent’s likelihood of re-election by approximately 20 percent, and was more pronounced in municipalities with radio stations. These findings highlight the value of information and the role of the media in reducing informational asymmetries in the political process.