Pas de Deux of Illegal and Legal Corruption in America

Abstract

American states vary in their ethical climates, but a lack of data impedes comparisons. Based on a survey of reporters covering state politics, we construct new indices measuring illegal and legal corruption in the states. Illegal corruption is private gain, in the form of cash or gifts, by a government official in exchange for specific benefits to private interests; legal corruption is political gain in the form of campaign contributions or endorsements by an official in exchange for such benefits, whether by explicit or implicit understanding. To our knowledge, this is the first attempt to capture the difference between the two in America. We find that states vary widely on both dimensions and there is a complementary relationship between illegal and legal corruption which is bidirectional.

Keywords: Illegal Corruption, Legal Corruption, American States

JEL Classification: D72, D73