Culture, Trust & the Economy
Why Corruption Persists: Norms and Expectations
How expectations about what others do can keep corruption entrenched, what a famous study of diplomats' parking tickets revealed, and how norms can shift.
Corruption is often treated as a matter of individual morality. Economists also see it as a coordination problem shaped by norms and expectations: if everyone expects others to pay bribes, paying one seems normal and refusing seems costly.
Diplomats and parking tickets
In a famous study, economists Raymond Fisman and Edward Miguel studied unpaid parking tickets by United Nations diplomats in New York City between 1997 and 2005. Because diplomats had immunity, they faced no legal penalty for unpaid tickets. The researchers found that diplomats from countries with high levels of corruption accumulated far more unpaid tickets than those from low-corruption countries. This suggested that norms from home countries influenced behaviour even without enforcement.
When New York gained the power to confiscate diplomatic licence plates for unpaid tickets in 2002, unpaid tickets fell sharply. Enforcement mattered too.
Why corruption can be self-reinforcing
- If most officials take bribes, an honest official gains little and may face pressure from colleagues.
- If citizens expect to pay bribes, they offer them, encouraging officials to demand them.
- Corruption can become an equilibrium: a stable situation that persists because everyone’s expectations support it.
Shifting the equilibrium
Breaking a corrupt equilibrium often requires changing many expectations at once:
- Credible enforcement, as with Georgia’s police reforms.
- Removing discretion, such as digitising services so officials cannot demand bribes. India’s online services for passports, land records and payments reduced opportunities for petty bribery.
- Transparency, such as publishing data on spending.
- Changing norms through leadership and public campaigns.
In the past, getting a passport in India could involve long waits and informal payments to agents. After the Passport Seva system introduced online applications, appointment slots and standardised processing from 2010 onward, the need for middlemen fell sharply. Changing the system changed people's expectations.
The diplomats study showed that home-country norms matter, but also that enforcement quickly changed behaviour. Institutions, incentives and expectations can all be changed.
- Corruption can be a self-reinforcing equilibrium based on expectations.
- UN diplomats from high-corruption countries accumulated more unpaid parking tickets.
- When enforcement began in 2002, unpaid tickets fell sharply.
- Enforcement, digitisation, transparency and leadership can shift the equilibrium.
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