Does Corruption Affect the Private Provision of Public Goods?

30 Pages Posted: 6 Feb 2018

See all articles by Tobias Cagala

Tobias Cagala

Deutsche Bundesbank

Ulrich Glogowsky

Ludwig Maximilian University of Munich (LMU)

Veronika Grimm

University of Erlangen-Nuremberg-Friedrich Alexander Universität Erlangen Nürnberg - School of Business & Economics

Johannes Rincke

University of Erlangen-Nuremberg-Friedrich Alexander Universität Erlangen Nürnberg

Amanda Tuset Cueva

University of Erlangen-Nuremberg-Friedrich Alexander Universität Erlangen Nürnberg

Date Written: July 4, 2017

Abstract

We present controlled experimental evidence on how corruption affects the private provision of public goods. Subjects in our experiment donate to non-profit associations. The associations provide local public goods that benefit all subjects. We compare average contributions between two conditions with the same efficiency: a corruption condition, where an administrator can expropriate part of contributions, and a control condition without corruption. Compared to the control condition, subjects matched to an expropriating administrator significantly reduce their contributions. Hence, contributors are less inclined to behave prosocially (i.e. are more likely to free-ride) if they are exposed to corruption. We demonstrate that this effect works through a specific channel: corruption breaks the otherwise positive link between baseline preferences for cooperation and private contributions to public goods.

Keywords: corruption, private provision of public goods, contribution behavior, cooperation, prosocial behavior

JEL Classification: D02, D03, H41

Suggested Citation

Cagala, Tobias and Glogowsky, Ulrich and Grimm, Veronika and Rincke, Johannes and Tuset Cueva, Amanda, Does Corruption Affect the Private Provision of Public Goods? (July 4, 2017). Available at SSRN: https://ssrn.com/abstract=3112049 or http://dx.doi.org/10.2139/ssrn.3112049

Tobias Cagala

Deutsche Bundesbank ( email )

Wilhelm-Epstein-Str. 14
Frankfurt/Main, 60431
Germany

Ulrich Glogowsky (Contact Author)

Ludwig Maximilian University of Munich (LMU) ( email )

Geschwister-Scholl-Platz 1
Munich, Bavaria 80539
Germany

Veronika Grimm

University of Erlangen-Nuremberg-Friedrich Alexander Universität Erlangen Nürnberg - School of Business & Economics ( email )

Nuremburg
Germany

Johannes Rincke

University of Erlangen-Nuremberg-Friedrich Alexander Universität Erlangen Nürnberg ( email )

Schloßplatz 4
Erlangen, Bavaria 91054
Germany

Amanda Tuset Cueva

University of Erlangen-Nuremberg-Friedrich Alexander Universität Erlangen Nürnberg ( email )

Schloßplatz 4
Erlangen, Bavaria 91054
Germany

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