Democracy Corrupted: Apex Corruption and the Erosion of Democratic Values

87 Pages Posted: 15 May 2024

See all articles by Eduardo Rivera

Eduardo Rivera

Massachusetts Institute of Technology (MIT) - Department of Economics

Enrique Seira

Instituto Tecnológico Autónomo de México (ITAM) - Centro de Investigacion Economica

Saumitra Jha

Stanford Graduate School of Business

Date Written: May 15, 2024

Abstract

Democratic values are eroding just as citizens perceive increasing corruption, with numerous cases implicating the highest-level politicians. Could perceived increases in apex corruption be weakening democracy? We first present event study analyses of more than 170 high-profile corruption scandals involving some of the most prominent politicians in 17 Latin American countries. We show that in the aftermath of such apex corruption scandals, support for democracy falls by 0.07𝑠𝑑, support for authoritarianism rises by 11% and violent protests rise by 70%. We complement these results with a field experiment in Mexico. Randomized exposure to footage of apex corruption scandals, particularly implicating politicians known for their anticorruption platforms, decreases individuals’ support for democracy by 0.15𝑠𝑑, willingness to trust politicians and neighbors in incentivized games by 18% and 11%, volunteering as election observers by 45%, and actual voter turnout by about 5𝑝𝑝, while raising stealing from local mayors by 4%. The undermining of democratic values produces latent effects that even cumulate four months later. Seeking solutions, priming national identity proved an unsuccessful antidote, but providing exposure to national stock index funds holds some promise.

Keywords: apex corruption, apex honesty, democratic recession, trust, institutions, civic norms, voting, nation-building, finance, populism, field experiment

JEL Classification: D72, D73, C93, C72, D02, D91, K42, O10, P00, Z1

Suggested Citation

Rivera, Eduardo and Seira, Enrique and Jha, Saumitra, Democracy Corrupted: Apex Corruption and the Erosion of Democratic Values (May 15, 2024). Stanford University Graduate School of Business Research Paper No. 4166, Available at SSRN: https://ssrn.com/abstract=4828243 or http://dx.doi.org/10.2139/ssrn.4828243

Eduardo Rivera

Massachusetts Institute of Technology (MIT) - Department of Economics ( email )

50 Memorial Drive
E52-391
Cambridge, MA 02142
United States

Enrique Seira

Instituto Tecnológico Autónomo de México (ITAM) - Centro de Investigacion Economica ( email )

Av. Camino a Santa Teresa #930
Col. Heroes de Padierna
Mexico City, D.F. 10370
Mexico

Saumitra Jha (Contact Author)

Stanford Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305-5015
United States

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