Tuesday, May 16, 2006

Corrupt at home, corrupt abroad?

"...even when stationed thousands of miles away, diplomats behave in a manner highly reminiscent of officials in home country..."

Do diplomats bring the corruption "culture" of their home countries when they move to New York City? There seems to be evidence that the answer is "yes", at least according to Ray Fisman and Edward Miguel in their their paper on corruption (via PSD) using data on parking violations committed by thousands of diplomats in New York City. The study finds that diplomats from countries highly perceived as corrupt (using the Corruption Perception Index created by Transparency International) also have significantly higher number of unpaid parking tickets.

Why parking tickets? Scarcity of parking spots in NYC is legendary and each diplomatic mission to the UN is only given two spots for their cars, regardless of the size of the mission. Cars with diplomatic license plates can be ticketed for parking violations but the diplomats who are the registrants of the cars are immune from any legal punishment if they choose not to pay the tickets. Economic prediction then would tell us that no one will make any payment since everyone can get away with it. One can then argue, as did the authors, that the number of unpaid parking violations represents the revealed preference on "corruption" of the diplomats (or the mission). And guess what, apparently diplomats who come from countries perceived as least corrupt tend to have the least number or even zero unpaid parking tickets. On the other hand, diplomats from countries high in the CPI ranking revealed their preference to, er.. not paying the tickets.

[Quiz: How many of you are actually familiar with our own traffic infraction procedures? Do you know about the blue and red forms? Here's an amusing "how-to" guide to do it the right way - and by that I mean the least corrupt way, not necessarily the cheapest way.]

So what country has the highest number of parking violations per diplomat between November '97 to November '02? It's Kuwait, with 246 unpaid parking tickets per year per diplomat (they have 9 diplomats in 1998). You would think after what the US did for them in Desert Storm....

At the other end of the list is Turkey, with zero unpaid parking tickets for their 25 diplomats (remember zero means either they committed no violations or they paid for all the violations they made). There are around 20 other countries also with zeroes but Japan deserves a mention because they have 47 diplomats stationed in New York.

Okay, what about Indonesia? We're number 24 (pop the champagne!), with an annual average of 36 unpaid parking tickets per diplomat. Considering there were 25 Indonesian diplomats in New York City in 1998, the number suggests that our diplomats racked up around 900 unpaid parking tickets per year (Three cars get ticketed every single day? One car three times a day? Any helpful readers from NYC? Just curious).

In the paper the authors control for various things including the size of the mission, the country's per capita income, as well as the number of cars registered per mission, but the strong correlations between corruption in home country and the number of unpaid tickets are still there. They went as far as to conclude:

"This strongly suggests that one's background and experiences, what we might call culture, does indeed contribute to bad behavior"

Earlier, we were having a discussion on corruption, provoked by a.p.'s post about whether corruption is necessarily a bad thing. I and others thought that a lot of things a.p. were alluding to in that post were probably only relevant in a second-best world. Norm and culture didn't really enter our discussion, although Treespotter did suggest that disregard for law and order in one area may spill to other areas. Now this paper is saying that diplomats seem to bring their home countries' norms along with them when they come to New York City.

Another interesting result of the paper is that diplomats from countries whose population have unfavorable attitudes toward the US (based on the Pew Index) also tend to have significantly higher number of parking violations; a result interpreted by the authors as evidence that sentiments play a role in the decision to pay the tickets. Proportion of Muslim population does not appear to be significantly related to unpaid parking violations, just in case you are curious about that. I was.

Back on the domestic front, there's a number of important empirical papers on corruption written by Ari Kuncoro of LPEM/FEUI. One of those, a paper on the relationship between bribes and regulation at the local level has been published in the BIES. He has several other papers, some of them you can find at the NBER working paper website. And of course the paper by Ben Olken on corruption in road building also worth a mention.


  1. For the Indonesian case, there was the time that only the cars for the ambasador and consulate general had diplomatic plates. Other diplomatic plates were withheld by the city because of the unpaid parking tickets. So most Indonesian diplomats were using non-diplomatic plates. Only about two years ago that they paid all of the outstanding balance to get the diplomatic plates back (4-6 plates). Now they have a strict rule: parking tickets are the responsibility of the drivers (most of them are not diplomats, however; they are local staff i.e. Indonesian-Americans who work there). They are also renting additional parking spaces now.

    So the 900 cases per year, possibly, was before the city retaliated by confiscating their diplomatic plates.

  2. aco, so much for agreeing with you, I must give you a healthy warning: some people would love to kick your arse for not bringing ethic and morality into the equation :-)

    but then again, we're economists, we get used to be hated :-)

  3. Not paying definitely seems rational. In fact the real question is: why pay at all? And this is where revealed preference comes in. The fact that the "honest" diplomats could afford to choose either options (paying or not paying) and decided to choose to pay, reveal their preference for "honesty".

    Rizal, remember whenever people say they hate economists, just tell them to see this.

  4. i didn't remove my comment but it said: "This post has been removed by the author." it was a long one, hmpf.

  5. rob, sorry. don't know what happened.

  6. who's kicking, rizal? schmoopie?

  7. aco, so you don't mind being kicked in the arse as long she's a schmoopie? me neither :-). And mind your comment in the other mailing list, we're here no crooks --only wayward economists :-)

  8. ah, parking in NY... well, the diplomats should've known better that subways are the most reliable mean of transportation. but then again, they're indonesian... (okay, didn't have a good relationship with the Konjen and PTRI back then :P)
    i've heard this story before from the indonesian diplomat himself, which happened to be sjamsu's friend. it's true that they choose not to pay the tickets.. well, roby seems to know the story better...

    and Aco, no. as much as pain you can be sometimes, i don't want to kick your ass :D
    rizal, why do some people hate us for being rational? world is a better place with more rational people ;)

  9. uh, uh.... i didn't hear anything about this parking business lately, but i think yeah, roby was right, until about 2-3 years ago, we held the record for parking ticket, i believe competing closely with iran or something. bloomberg made that a campaign issue, even.

    values morality love hate economists can't live with them, can't live without them!

  10. Roby: That sounds right. The paper actually talks about the crackdown which occurred near the end of the study period. There's also interesting stuff in the paper about post-9/11 change in behavior.

  11. If in New York where they have proper records on parking violations and the unpaid, I wonder how much have been violated in a less structured cities ?
    Don't know about corruption, but I heard there are examples of those who tried making money out of their posts. Shamefully.

  12. I got this funny story from Indonesian diplomat in DC. To avoid parking ticket, they usually took the ticket from other car that already got ticket, and put it in their car:)