• Chart of the Week
  • May 19, 2021

Trickle down corruption

Former President Enrique Peña Nieto announces the resignation of Doctor José Antonio Meade, as Secretary of Finance and Public Credit.

Presidencia de la República, CC BY 2.0 <https://creativecommons.org/licenses/by/2.0>, via Wikimedia Commons

Last year, Mexico was rocked by claims of corruption against three former presidents who were accused of participating in multimillion-dollar bribe schemes, illegal campaign financing, and other crimes.

The scandal may have far-reaching consequences for Mexican politics, and the publicity may be changing norms in the rest of society, according to a paper in the American Economic Journal: Applied Economics.

Author Nicolás Ajzenman examined the impact of local political corruption on the honesty of secondary students in Mexico.

Using a statistical technique called difference-in-differences, Ajzenman examined audit reports from municipalities between 2006 and 2013, and rates of software-detected cheating on compulsory standardized exams.

Figure 3 from the author’s paper shows that cheating on tests increased significantly following revelations of corruption by local officials.

 

 

Figure 3 from Nicolás Ajzenman (2021)

 

The leftmost dot represents the municipalities in the bottom quartile of unauthorized government expenditures (least corrupt), and the rightmost dot represents those in the top quartile (most corrupt). The vertical bars are 95 percent confidence intervals.

At lower levels of corruption, there is a positive but insignificant effect on cheating rates in schools. That effect increases as corruption becomes more salient and is significant at the highest quartile of corruption. 

Overall, secondary school students were 10 percent more likely to cheat on standardized tests following revelations of corrupt behavior on the part of local officials. 

Ajzenman’s work is evidence that political leaders are examples to their citizens and help shape the ethical standards of the societies they govern.

The Power of Example: Corruption Spurs Corruption appears in the April 2021 issue of the American Economic Journal: Applied Economics.