Achievement

CORRUPTION DYNAMICS: THE GOLDEN GOOSE EFFECT. Trainee Sandip Sukhtankar (with Peter Niehaus) study dynamic incentives for corruption in one of the world’s largest public transfer programs, India’s National Rural Employment Guarantee Act. They uncover large-scale embezzlement along multiple margins: theft from beneficiaries and theft from taxpayers. Using changes in statutory program benefits as instruments, they then test a simple, dynamic model of rent extraction. They find evidence for a ‘golden goose’ effect: when expected future opportunities for rent extraction are high, officials extract less rent today in order to preserve tomorrow’s opportunities. This behavioral response tends to stabilize levels of corruption in the face of external shocks. This paper was accepted for presentation at several conferences, including the prestigious BREAD (Bureau for Research in the Economic Analysis of Development) at Duke University.