Corruption as a Self-Reinforcing “Trap”:
Description: Corruption as a Self-Reinforcing Trap: Implications for Reform Strategy Matthew C. Stephenson Harvard Law School Self-Reinforcing Corruption (and VirtuousVicious Cycles) Self-Reinforcing Corruption (and VirtuousVicious Cycles)
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slide1. Corruption as a Self-Reinforcing “Trap”: Implications for Reform Strategy Matthew C. Stephenson
Harvard Law School<br>
slide2. Self-Reinforcing Corruption (and Virtuous/Vicious Cycles)<br>
slide3. Self-Reinforcing Corruption (and Virtuous/Vicious Cycles) Widespread corruption<br>
slide4. Self-Reinforcing Corruption (and Virtuous/Vicious Cycles) Widespread corruption Weaker deterrence<br>
slide5. Self-Reinforcing Corruption (and Virtuous/Vicious Cycles) Widespread corruption Weaker deterrence Stronger individual incentives
to engage in corruption<br>
slide6. Self-Reinforcing Corruption (and Virtuous/Vicious Cycles) Widespread corruption Weaker deterrence Stronger individual incentives
to engage in corruption<br>
slide7. Self-Reinforcing Corruption (and Virtuous/Vicious Cycles) Low levels of corruption Stronger deterrence Weaker individual incentives
to engage in corruption<br>
slide8. Self-Reinforcing Corruption (and Virtuous/Vicious Cycles) Widespread corruption Weaker deterrence Stronger individual incentives
to engage in corruption<br>
slide9. Self-Reinforcing Corruption (and Virtuous/Vicious Cycles) Widespread corruption Weaker social/moral norms
against corruption Stronger individual incentives
to engage in corruption<br>
slide10. Self-Reinforcing Corruption (and Virtuous/Vicious Cycles) Widespread corruption Selection of corrupt actors
into the relevant community Stronger individual incentives
to engage in corruption<br>
slide11. Self-Reinforcing Corruption (and Virtuous/Vicious Cycles) Widespread corruption Lower per capita income/
Higher economic inequality/
Lower social trust & political engagement Stronger individual incentives
to engage in corruption<br>
slide12. What follows from this? What are the implications for anticorruption strategy?<br>
slide13. An influential view:<br>
slide14. An influential view: Self-reinforcing corruption implies multiple equilibria: a low-corruption equilibrium and a high-corruption equilibrium “trap.”<br>
slide15. An influential view: Self-reinforcing corruption implies multiple equilibria: a low-corruption equilibrium and a high-corruption equilibrium “trap.”
Because corruption is a self-reinforcing equilibrium, incremental reforms will have little or no effect. The only way to reduce corruption is to “tip” the system from the high-corruption equilibrium to the low-corruption equilibrium.<br>
slide16. An influential view: Self-reinforcing corruption implies multiple equilibria: a low-corruption equilibrium and a high-corruption equilibrium “trap.”
Because corruption is a self-reinforcing equilibrium, incremental reforms will have little or no effect. The only way to reduce corruption is to “tip” the system from the high-corruption equilibrium to the low-corruption equilibrium.
The only way to effect a switch from the high-corruption equilibrium “trap” to the low-corruption equilibrium is a “big bang” or “big push”: changing many things at once, very rapidly.<br>
slide17. “[An] important implication of the high-corruption trap is that the fight against corruption needs to be
a coordinated ‘big push’ operating on several fronts at once. The society is trapped in what economists
would call a locally stable equilibrium: small efforts to reduce corruption will be overcome by the
incentives which return the society to its initial pattern of behaviour.” Paul Collier
(Oxford)<br>
slide18. If “the net rewards of corruption increase as the incidence of corruption increases,” then the society
“may get caught in a trap where high corruption levels beget high corruption levels.” In such a situation,
a low-corruption equilibrium is “unreachable in small steps from the status quo.” Susan Rose-Ackerman
(Yale)<br>
slide19. “[A]s is often the case with models involving … multiple equilibria …, gradual reforms are less likely to
work than more ambitious, comprehensive reforms.” Paolo Mauro
(IMF)<br>
slide20. When corruption is systemic, “following the incremental approach is dysfunctional…. [W]hat is
needed to establish [a] new equilibrium … is a ‘big bang’ type of change…. The implication [of seeing
corruption as a self-reinforcing problem] is that taking small steps by installing a few specific
institutions … is all likelihood a policy in vain.” Bo Rothstein
(Gothenburg)<br>
slide24. An influential view: Self-reinforcing corruption implies multiple equilibria: a low-corruption equilibrium and a high-corruption equilibrium “trap.”
Because corruption is a self-reinforcing equilibrium, incremental reforms will have little or no effect. The only way to reduce corruption is to “tip” the system from the high-corruption equilibrium to the low-corruption equilibrium.
The only way to effect a switch from the high-corruption equilibrium “trap” to the low-corruption equilibrium is a “big bang” or “big push”: changing many things at once, very rapidly.<br>
slide25. An influential view: Self-reinforcing corruption implies multiple equilibria: a low-corruption equilibrium and a high-corruption equilibrium “trap.”
Because corruption is a self-reinforcing equilibrium, incremental reforms will have little or no effect. The only way to reduce corruption is to “tip” the system from the high-corruption equilibrium to the low-corruption equilibrium.
The only way to effect a switch from the high-corruption equilibrium “trap” to the low-corruption equilibrium is a “big bang” or “big push”: changing many things at once, very rapidly.<br>
slide28. An influential view: Self-reinforcing corruption implies multiple equilibria: a low-corruption equilibrium and a high-corruption equilibrium “trap.”
Because corruption is a self-reinforcing equilibrium, incremental reforms will have little or no effect. The only way to reduce corruption is to “tip” the system from the high-corruption equilibrium to the low-corruption equilibrium.
The only way to effect a switch from the high-corruption equilibrium “trap” to the low-corruption equilibrium is a “big bang” or “big push”: changing many things at once, very rapidly.<br>
slide29. An influential view: Self-reinforcing corruption implies multiple equilibria: a low-corruption equilibrium and a high-corruption equilibrium “trap.”
Because corruption is a self-reinforcing equilibrium, incremental reforms will have little or no effect. The only way to reduce corruption is to “tip” the system from the high-corruption equilibrium to the low-corruption equilibrium.
The only way to effect a switch from the high-corruption equilibrium “trap” to the low-corruption equilibrium is a “big bang” or “big push”: changing many things at once, very rapidly.<br>
slide31. An influential view: Self-reinforcing corruption implies multiple equilibria: a low-corruption equilibrium and a high-corruption equilibrium “trap.”
Because corruption is a self-reinforcing equilibrium, incremental reforms will have little or no effect. The only way to reduce corruption is to “tip” the system from the high-corruption equilibrium to the low-corruption equilibrium.
The only way to effect a switch from the high-corruption equilibrium “trap” to the low-corruption equilibrium is a “big bang” or “big push”: changing many things at once, very rapidly.<br>
slide32. An influential view: Self-reinforcing corruption implies multiple equilibria: a low-corruption equilibrium and a high-corruption equilibrium “trap.”
Because corruption is a self-reinforcing equilibrium, incremental reforms will have little or no effect. The only way to reduce corruption is to “tip” the system from the high-corruption equilibrium to the low-corruption equilibrium.
The only way to effect a switch from the high-corruption equilibrium “trap” to the low-corruption equilibrium is a “big bang” or “big push”: changing many things at once, very rapidly.<br>
slide33. An influential view: Self-reinforcing corruption implies may imply multiple equilibria if other conditions are satisfied: a low-corruption equilibrium and a high-corruption equilibrium “trap.”
Because corruption is a self-reinforcing equilibrium, incremental reforms will have little or no effect. The only way to reduce corruption is to “tip” the system from the high-corruption equilibrium to the low-corruption equilibrium.
The only way to effect a switch from the high-corruption equilibrium “trap” to the low-corruption equilibrium is a “big bang” or “big push”: changing many things at once, very rapidly.<br>
slide37. An influential view: Self-reinforcing corruption implies may imply multiple equilibria if other conditions are satisfied: a low-corruption equilibrium and a high-corruption equilibrium “trap.”
Because corruption is a self-reinforcing equilibrium, incremental reforms will have little or no effect. The only way to reduce corruption is to “tip” the system from the high-corruption equilibrium to the low-corruption equilibrium.
The only way to effect a switch from the high-corruption equilibrium “trap” to the low-corruption equilibrium is a “big bang” or “big push”: changing many things at once, very rapidly.<br>
slide38. An influential view: Self-reinforcing corruption implies may imply multiple equilibria if other conditions are satisfied: a low-corruption equilibrium and a high-corruption equilibrium “trap.”
Because corruption is a self-reinforcing equilibrium, incremental reforms will have little or no effect. The only way to reduce corruption is to “tip” the system from the high-corruption equilibrium to the low-corruption equilibrium.
The only way to effect a switch from the high-corruption equilibrium “trap” to the low-corruption equilibrium is a “big bang” or “big push”: changing many things at once, very rapidly.<br>
slide39. An influential view: Self-reinforcing corruption implies may imply multiple equilibria if other conditions are satisfied: a low-corruption equilibrium and a high-corruption equilibrium “trap.”
Because corruption is a self-reinforcing equilibrium, incremental reforms will have little or no effect. The only One way to reduce corruption is may be to “tip” the system from the high-corruption equilibrium to the low-corruption equilibrium. But incremental reforms can also reduce equilibrium corruption levels.
The only way to effect a switch from the high-corruption equilibrium “trap” to the low-corruption equilibrium is a “big bang” or “big push”: changing many things at once, very rapidly.<br>
slide40. An influential view: Self-reinforcing corruption implies may imply multiple equilibria if other conditions are satisfied: a low-corruption equilibrium and a high-corruption equilibrium “trap.”
Because corruption is a self-reinforcing equilibrium, incremental reforms will have little or no effect. The only One way to reduce corruption is may be to “tip” the system from the high-corruption equilibrium to the low-corruption equilibrium. But incremental reforms can also reduce equilibrium corruption levels.
The only One way to effect a switch from the high-corruption equilibrium “trap” to the low-corruption equilibrium is a “big bang” or “big push”: changing many things at once, very rapidly. But another way is via the accumulation of a sufficient number of incremental reforms.<br>
slide41. Why Should Anyone Care?<br>
slide42. Why Should Anyone Care? Sloppy analysis<br>
slide43. Why Should Anyone Care? Sloppy analysis
Privileging magnitude over sustainability<br>
slide44. Why Should Anyone Care? Sloppy analysis
Privileging magnitude over sustainability
Fatalism/cynicism/complacency<br>
slide45. Why Should Anyone Care? Sloppy analysis
Privileging magnitude over sustainability
Fatalism/cynicism/complacency
(Quasi-)authoritarianism<br>
Harvard Law School<br>
slide2. Self-Reinforcing Corruption (and Virtuous/Vicious Cycles)<br>
slide3. Self-Reinforcing Corruption (and Virtuous/Vicious Cycles) Widespread corruption<br>
slide4. Self-Reinforcing Corruption (and Virtuous/Vicious Cycles) Widespread corruption Weaker deterrence<br>
slide5. Self-Reinforcing Corruption (and Virtuous/Vicious Cycles) Widespread corruption Weaker deterrence Stronger individual incentives
to engage in corruption<br>
slide6. Self-Reinforcing Corruption (and Virtuous/Vicious Cycles) Widespread corruption Weaker deterrence Stronger individual incentives
to engage in corruption<br>
slide7. Self-Reinforcing Corruption (and Virtuous/Vicious Cycles) Low levels of corruption Stronger deterrence Weaker individual incentives
to engage in corruption<br>
slide8. Self-Reinforcing Corruption (and Virtuous/Vicious Cycles) Widespread corruption Weaker deterrence Stronger individual incentives
to engage in corruption<br>
slide9. Self-Reinforcing Corruption (and Virtuous/Vicious Cycles) Widespread corruption Weaker social/moral norms
against corruption Stronger individual incentives
to engage in corruption<br>
slide10. Self-Reinforcing Corruption (and Virtuous/Vicious Cycles) Widespread corruption Selection of corrupt actors
into the relevant community Stronger individual incentives
to engage in corruption<br>
slide11. Self-Reinforcing Corruption (and Virtuous/Vicious Cycles) Widespread corruption Lower per capita income/
Higher economic inequality/
Lower social trust & political engagement Stronger individual incentives
to engage in corruption<br>
slide12. What follows from this? What are the implications for anticorruption strategy?<br>
slide13. An influential view:<br>
slide14. An influential view: Self-reinforcing corruption implies multiple equilibria: a low-corruption equilibrium and a high-corruption equilibrium “trap.”<br>
slide15. An influential view: Self-reinforcing corruption implies multiple equilibria: a low-corruption equilibrium and a high-corruption equilibrium “trap.”
Because corruption is a self-reinforcing equilibrium, incremental reforms will have little or no effect. The only way to reduce corruption is to “tip” the system from the high-corruption equilibrium to the low-corruption equilibrium.<br>
slide16. An influential view: Self-reinforcing corruption implies multiple equilibria: a low-corruption equilibrium and a high-corruption equilibrium “trap.”
Because corruption is a self-reinforcing equilibrium, incremental reforms will have little or no effect. The only way to reduce corruption is to “tip” the system from the high-corruption equilibrium to the low-corruption equilibrium.
The only way to effect a switch from the high-corruption equilibrium “trap” to the low-corruption equilibrium is a “big bang” or “big push”: changing many things at once, very rapidly.<br>
slide17. “[An] important implication of the high-corruption trap is that the fight against corruption needs to be
a coordinated ‘big push’ operating on several fronts at once. The society is trapped in what economists
would call a locally stable equilibrium: small efforts to reduce corruption will be overcome by the
incentives which return the society to its initial pattern of behaviour.” Paul Collier
(Oxford)<br>
slide18. If “the net rewards of corruption increase as the incidence of corruption increases,” then the society
“may get caught in a trap where high corruption levels beget high corruption levels.” In such a situation,
a low-corruption equilibrium is “unreachable in small steps from the status quo.” Susan Rose-Ackerman
(Yale)<br>
slide19. “[A]s is often the case with models involving … multiple equilibria …, gradual reforms are less likely to
work than more ambitious, comprehensive reforms.” Paolo Mauro
(IMF)<br>
slide20. When corruption is systemic, “following the incremental approach is dysfunctional…. [W]hat is
needed to establish [a] new equilibrium … is a ‘big bang’ type of change…. The implication [of seeing
corruption as a self-reinforcing problem] is that taking small steps by installing a few specific
institutions … is all likelihood a policy in vain.” Bo Rothstein
(Gothenburg)<br>
slide24. An influential view: Self-reinforcing corruption implies multiple equilibria: a low-corruption equilibrium and a high-corruption equilibrium “trap.”
Because corruption is a self-reinforcing equilibrium, incremental reforms will have little or no effect. The only way to reduce corruption is to “tip” the system from the high-corruption equilibrium to the low-corruption equilibrium.
The only way to effect a switch from the high-corruption equilibrium “trap” to the low-corruption equilibrium is a “big bang” or “big push”: changing many things at once, very rapidly.<br>
slide25. An influential view: Self-reinforcing corruption implies multiple equilibria: a low-corruption equilibrium and a high-corruption equilibrium “trap.”
Because corruption is a self-reinforcing equilibrium, incremental reforms will have little or no effect. The only way to reduce corruption is to “tip” the system from the high-corruption equilibrium to the low-corruption equilibrium.
The only way to effect a switch from the high-corruption equilibrium “trap” to the low-corruption equilibrium is a “big bang” or “big push”: changing many things at once, very rapidly.<br>
slide28. An influential view: Self-reinforcing corruption implies multiple equilibria: a low-corruption equilibrium and a high-corruption equilibrium “trap.”
Because corruption is a self-reinforcing equilibrium, incremental reforms will have little or no effect. The only way to reduce corruption is to “tip” the system from the high-corruption equilibrium to the low-corruption equilibrium.
The only way to effect a switch from the high-corruption equilibrium “trap” to the low-corruption equilibrium is a “big bang” or “big push”: changing many things at once, very rapidly.<br>
slide29. An influential view: Self-reinforcing corruption implies multiple equilibria: a low-corruption equilibrium and a high-corruption equilibrium “trap.”
Because corruption is a self-reinforcing equilibrium, incremental reforms will have little or no effect. The only way to reduce corruption is to “tip” the system from the high-corruption equilibrium to the low-corruption equilibrium.
The only way to effect a switch from the high-corruption equilibrium “trap” to the low-corruption equilibrium is a “big bang” or “big push”: changing many things at once, very rapidly.<br>
slide31. An influential view: Self-reinforcing corruption implies multiple equilibria: a low-corruption equilibrium and a high-corruption equilibrium “trap.”
Because corruption is a self-reinforcing equilibrium, incremental reforms will have little or no effect. The only way to reduce corruption is to “tip” the system from the high-corruption equilibrium to the low-corruption equilibrium.
The only way to effect a switch from the high-corruption equilibrium “trap” to the low-corruption equilibrium is a “big bang” or “big push”: changing many things at once, very rapidly.<br>
slide32. An influential view: Self-reinforcing corruption implies multiple equilibria: a low-corruption equilibrium and a high-corruption equilibrium “trap.”
Because corruption is a self-reinforcing equilibrium, incremental reforms will have little or no effect. The only way to reduce corruption is to “tip” the system from the high-corruption equilibrium to the low-corruption equilibrium.
The only way to effect a switch from the high-corruption equilibrium “trap” to the low-corruption equilibrium is a “big bang” or “big push”: changing many things at once, very rapidly.<br>
slide33. An influential view: Self-reinforcing corruption implies may imply multiple equilibria if other conditions are satisfied: a low-corruption equilibrium and a high-corruption equilibrium “trap.”
Because corruption is a self-reinforcing equilibrium, incremental reforms will have little or no effect. The only way to reduce corruption is to “tip” the system from the high-corruption equilibrium to the low-corruption equilibrium.
The only way to effect a switch from the high-corruption equilibrium “trap” to the low-corruption equilibrium is a “big bang” or “big push”: changing many things at once, very rapidly.<br>
slide37. An influential view: Self-reinforcing corruption implies may imply multiple equilibria if other conditions are satisfied: a low-corruption equilibrium and a high-corruption equilibrium “trap.”
Because corruption is a self-reinforcing equilibrium, incremental reforms will have little or no effect. The only way to reduce corruption is to “tip” the system from the high-corruption equilibrium to the low-corruption equilibrium.
The only way to effect a switch from the high-corruption equilibrium “trap” to the low-corruption equilibrium is a “big bang” or “big push”: changing many things at once, very rapidly.<br>
slide38. An influential view: Self-reinforcing corruption implies may imply multiple equilibria if other conditions are satisfied: a low-corruption equilibrium and a high-corruption equilibrium “trap.”
Because corruption is a self-reinforcing equilibrium, incremental reforms will have little or no effect. The only way to reduce corruption is to “tip” the system from the high-corruption equilibrium to the low-corruption equilibrium.
The only way to effect a switch from the high-corruption equilibrium “trap” to the low-corruption equilibrium is a “big bang” or “big push”: changing many things at once, very rapidly.<br>
slide39. An influential view: Self-reinforcing corruption implies may imply multiple equilibria if other conditions are satisfied: a low-corruption equilibrium and a high-corruption equilibrium “trap.”
Because corruption is a self-reinforcing equilibrium, incremental reforms will have little or no effect. The only One way to reduce corruption is may be to “tip” the system from the high-corruption equilibrium to the low-corruption equilibrium. But incremental reforms can also reduce equilibrium corruption levels.
The only way to effect a switch from the high-corruption equilibrium “trap” to the low-corruption equilibrium is a “big bang” or “big push”: changing many things at once, very rapidly.<br>
slide40. An influential view: Self-reinforcing corruption implies may imply multiple equilibria if other conditions are satisfied: a low-corruption equilibrium and a high-corruption equilibrium “trap.”
Because corruption is a self-reinforcing equilibrium, incremental reforms will have little or no effect. The only One way to reduce corruption is may be to “tip” the system from the high-corruption equilibrium to the low-corruption equilibrium. But incremental reforms can also reduce equilibrium corruption levels.
The only One way to effect a switch from the high-corruption equilibrium “trap” to the low-corruption equilibrium is a “big bang” or “big push”: changing many things at once, very rapidly. But another way is via the accumulation of a sufficient number of incremental reforms.<br>
slide41. Why Should Anyone Care?<br>
slide42. Why Should Anyone Care? Sloppy analysis<br>
slide43. Why Should Anyone Care? Sloppy analysis
Privileging magnitude over sustainability<br>
slide44. Why Should Anyone Care? Sloppy analysis
Privileging magnitude over sustainability
Fatalism/cynicism/complacency<br>
slide45. Why Should Anyone Care? Sloppy analysis
Privileging magnitude over sustainability
Fatalism/cynicism/complacency
(Quasi-)authoritarianism<br>