when enough is not enough: an exploratory analysis of corruption
TRANSCRIPT
S3H Working Paper Series
Number 05: 2016
When Enough is Not Enough:
An Exploratory Analysis of Corruption
Behavior in Select Urban Populations
Kh. Ayaz Ahmed
Ather Maqsood Ahmed
February 2016
School of Social Sciences and Humanities (S3H) National University of Sciences and Technology (NUST)
Sector H-12, Islamabad, Pakistan
S3H Working Paper Series
Faculty Editorial Committee
Dr. Zafar Mahmood (Head)
Dr. Najma Sadiq
Dr. Sehar Un Nisa Hassan
Dr. Lubaba Sadaf
Dr. Samina Naveed
Ms. Nazia Malik
S3H Working Paper Series
Number 05: 2016
When Enough is Not Enough:
An Exploratory Analysis of Corruption
Behavior in Select Urban Populations
Kh. Ayaz Ahmed Graduate, School of Social Sciences and Humanities, NUST
Ather Maqsood Ahmed Professor, School of Social Sciences & Humanities, NUST
February 2016
School of Social Sciences and Humanities (S3H)
National University of Sciences and Technology (NUST) Sector H-12, Islamabad, Pakistan
iii
Table of Contents
Abstract………………………………………………………………………... v
1. Introduction…………………………………………………………………… 1
2. Literature Review……………………………………………………………… 2
3. Theoretical Framework………………………………………………………… 8
3.1 Need vs Greed Corruption……………………………………………………... 8
3.2 Self-Selection and the Rational Choice Theory…………………………………. 11
3.3 The Decision-Making Process………………………………………………….. 15
4. Methodology…………………………………………………………………… 16
5. Results………………………………………………………………………….. 22
6. Discussion……………………………………………………………………… 28
7. Policy Implications……………………………………………………………... 31
8. Limitations and Further Research………………………………………………. 34
References……………………………………………………………………… 36
Appendix……………………………………………………………………….. 42
List of Tables
Table 1.1 Omnibus Tests of Model Coefficients…………………………………… 23
Table 1.2 Classification Table……………………………………………………… 23
Table 1.3 Regression Analysis……………………………………………………… 23
List of Figures
Figure 1.1 Neutral Preferences……………………………………………………… 12
Figure 1.2 Anti-Bribery Preferences………………………………………………… 13
Figure 1.3 Pro-Bribery Preferences………………………………………………….. 13
Figure 1.4 Involvement Model of Decision-Making………………………………… 15
Figure 1.5 Mediation Effect………………………………………………………… 27
v
Abstract
Corruption could be instigated by need or greed of an individual. Results of a survey conducted
during the research period, reveal that corruption is mainly motivated by greed in a study sample of
select urban populations, where higher socio-economic groups were found to be more likely to
indulge in unethical behavior, highlighting a probable ethical issue that may need to be addressed
vehemently. Moreover, results indicate that demographics such as gender and age do matter on the
choice to be corrupt, with males and younger aged individuals being more likely to be corrupt. This
highlights the need to pay greater focus on inculcating civic virtues, through effective parenting and
ethical training from an early age, in order to combat materialism and greed in a vulnerable
population. The need-greed differentiation also highlights corruption as a collective action problem
rather than a principal-agent problem, where a lack of ‘principled principals’ undermines efforts to
curb corruption and even moral heroism is hazardous. This is because when citizens are faced with
an opportunity to be corrupt, they justify the act by claiming that everyone else would do the same.
A large and consistent push is thus required to change the mindset of people to believe that other
actors, especially those at the helm of the system, will play fair.
Keywords: Need corruption, Greed corruption, Micro level survey, logistic regression
1
1. Introduction
Despite national and international efforts, anti-corruption programs have given mixed results,
especially in developing countries. At present, the key challenge for the anti-corruption movement is
to understand the varied success of tested programs in order to propose more effective ways to fight
the menace. While most efforts to curb corruption have relied heavily on country-level assessments
of overall levels of corruption, (usually measured by the frequency of paying bribes to a public
official) not much emphasis has been given to study the context and motivation behind the act.
More importantly, there has been a neglect in the literature on the moral aspects of the phenomenon
of corruption.
Most models of corruption and anti-corruption efforts revolve around the principal-agent
framework1 and have focused on economic, political, cultural and institutional approaches to analyze
the problem. This has led to large public sector reforms, particularly in terms of transparency,
accountability laws, decentralization of power, press freedom, privatization, and strengthening of the
civil society to act as active monitors. However, these systematic reforms have not been able to curb
corruption, especially in developing countries.
While all corrupt acts come under the same umbrella of corruption, the motives behind these acts
may be very different in nature. Corruption could be instigated by either need or greed of an
individual. It may not seem radical to claim that need corruption is highly prevalent because of the
level of poverty in Pakistan. Of greater concern is the prevalence of greed corruption. The
distinction between these two forms of corruption builds on the concept that motivations vary
between different settings. Similar to the extortive-collusive distinction in tax evasion models,
(Slemrod, 2006; Brunette and Weder, 2003) the basic motivators imply different relationships
between the actors involved. It is asserted that need corruption is built on extortion whereas greed
corruption on collusion (Bauhr and Nasiritousi, 2011). The motivation for paying a bribe, and the
obtrusiveness of corruption thus warrants further study to understand how different forces interplay
to develop (or undermine) the strength and engagement of “principals”.
1 The Principal-agent model analyzes the demand side of corruption and puts the onus on the bureaucrat for being corrupt and bribe-demanding. Corrective measures advocated by international anti-corruption agencies largely revolve around efforts to monitor public ‘agents’ by ‘principals’, no other than citizens or government bodies. For further insights, see Rose-Ackerman (1978, 1997); Klitgaard (1988).
2
Corruption is one of the biggest challenges that Pakistan faces. It has a notorious reputation as a
hindrance to overall economic development and growth. The consequences of letting corruption
persist may be disastrous for a country with an intricate economic, social and demographic profile
where approximately two-thirds of the population are under the age of thirty and the poor continue
to suffer as they are the ones who are denied the elements and resources necessary for economic
development. This vulnerable portion of society needs to be equipped and utilized in the most
effective manner in order to be able to reap the demographic dividend of the ‘Golden Age’ that the
nation has entered. If this youth bulge is neglected, the consequences may be inconceivable.
Additionally, there is a lack of empirical work which aims to understand corruption behavior from a
micro-level perspective. Studies on corruption in Pakistan are mostly based on aggregated macro-
level cross-country data, anecdotal assertions, media reports, press releases or court judgements.
This paper attempts to fill the void in the literature by adding empirical work on corruption behavior
from a micro-level perspective, through the design of an oblique research methodology.
Ascertaining the type of corruption at play-need or greed-may help unearth why many anti-
corruption programs fail and help propose alternative ways of tackling the problem.
We will be studying primary data gathered through surveys conducted in July 2014, on a select urban
sample. The survey2 was designed to capture demographics, socio-economic factors, psychographics,
and environmental factors which may influence an individual’s willingness to give or take a bribe.
Using qualitative response models that indicate probabilities of a discrete event to occur,
probabilistic regression techniques will be applied to examine factors that are more likely to increase
one’s willingness to bribe. More specifically, it examines whether the cause of corruption is rooted in
human weaknesses such as greed, by directly studying the individual, who may or may not be
motivated to bribe.
2. Literature Review
Previous empirical studies have entirely focused on finding cross-country differences in levels and
types of corruption using country-level corruption ratings. Apart from some notable contributions
to the topic, (Treisman, 2000; Swamy et al., 2001; Torgler and Valev, 2006; Mocan, 2008; Dong et al.,
2 For more information regarding the survey, please feel free to contact the authors.
3
2012; Lee, 2013) not much empirical work has been done on understanding corruption from a
micro-level perspective.
Socio-Economic Factors
Socio-economic factors are the primary determinant of whether corruption is motivated by need or
greed. Socio-economic status (SES) is determined mainly by factors such as income, education and
occupation. High SES societies are characterized by high income per capita, high education, and
higher occupational groups. Social pressures which may motivate an offender are more likely to arise
in low SES environments, particularly countries that lag behind in economic development.
Corruption is assumed to have a negative effect on economic development, and vice versa (Mauro,
1995), though the causality still remains a doubt. Treisman (2000) tests a number of hypotheses and
demonstrates that the level of corruption in a country is directly related to its level of economic
development, legal and cultural characteristics, at the macro level, as demonstrated in Equation (2.1):
( )
where, the extent of corruption in country j ( depends on its Legal (L) and Cultural (C)
attributes, and the level of economic development of the country (Econ). In a cross-section study of
developed and developing countries, Treisman (2000) finds that developing countries are perceived
to be more corrupt, with about 50-73% of the deviation in the perception indices explained solely by
income per capita.
Acemoglu, Johnson and Robinson (2001) show that the quality of institutions and quality of human
life in the country directly affects economic development. These connections are illustrated in
Equation (2.2):
( )
where, economic development in country j is dependent on the extent of corruption in the country
as well as institutional (I), cultural characteristics, human capital measures (H), and legal attributes.
Substituting Equation (2) into (1) generates the macro-level reduced form as shown in equation
(2.3):
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( )
Tavares (2005) regresses the Corruption Perception Index (CPI) on socio-economic and cultural
variables and finds similar results; the level of development of a country is the most important factor
in determining corruption levels. Developing countries are characterized by low per capita income,
which may be indicative of need corruption.
Moreover, an OECD study, finds a significant negative relationship between income per capita and
corruption. Countries with high income per capita rank better on the corruption perception index.
Low corruption may be considered as a luxury good in rich countries or it could be the case that low
corruption is a necessary condition to achieve high income per capita (OECD, 2011). As mentioned
earlier, societies where greed corruption is higher than need corruption, the effects of corruption are
widespread and not obtrusive, hence not that visible. Thus countries that may be inflicted with greed
corruption, may in fact do pretty well in corruption perception indices.
At the micro-level, corruption is determined by a rational cost-benefit analysis, as postulated by Becker
(1968). Personal characteristics and life-style attributes shape how individuals view risk, reward and effort of
indulging in corruption. If rewards outweigh the risks of getting apprehended, an individual is more
vulnerable to corruption.
Within this framework Mocan (2008) estimates equation (2.4):
( )
where, is the propensity of the ith individual who lives in country j to indulge or be a victim of
corruption, and represents personal characteristics of the individual. Using empirical data
gathered from 90,000 individuals from 49 countries, Mocan (2008) finds a non-linear relationship
between perceived corruption indices and the number of individuals asked for a bribe. The results
indicate that males, high income and highly educated individuals, and those living in larger cities are
more likely to be asked for a bribe. Moreover, marital status, legal origin of the country,
uninterrupted democracy, and the strength of institutions in the country were also important
determinants of corruption. These regressions were weighted and standard errors were adjusted
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because country-specific variables do not vary much at the individual level for a large number of
cases.
Socio-economic status and ethics. Recent studies that attempt to gauge moral values in socio-
economic groups reveal that higher socio-economic groups are more likely to indulge in unethical
behavior as compared to lower groups. Piff et al. (2012) conducted seven experiments revealing that
those belonging to higher socio-economic groups were more likely to be involved in traffic
violations, lie while negotiating terms, and cheat to increase their chances of winning among other
observed unethical behavior. Mediator analysis of these results revealed that these tendencies are
partly accounted for by their favorable attitudes towards greed. This claim is further substantiated by
Cote, Piff and Willer (2013) who show how socio-economic status has an effect on perceptions of
right and wrong. Likewise, Trautmann, de Kuilen and Zeckhauser (2012), also find lower
condemnation of wrong behavior by higher socio-economic groups.
Psychographic Factors
Psychological factors and lifestyle choices such as temperament, desires, materialism,
adventurism/risk aversion, ethics, anti-social behavior, political interest and narcissistic behavior can
affect one’s decision to indulge in corruption. Not much empirical evidence is available on the
impact of the above factors on corruption except that risk averse people are less likely to justify
corruption (Dong et al 2012), corruption is rampant in ‘anti-social’ countries (OECD, 2011), and
political interest lowers perceived corruption and justifiability of corruption (Dong, 2008).
Cultural Factors
In a study of two countries that are poles apart, Nigeria and United States, Tsalikis and Nwachukwu
(1991) find that culture has an effect on how respondents viewed acts of bribery and extortion.
Husted (1999) studies this link by introducing Hofstede’s cultural dimensions, namely: power
distance, individualism, collectivism, and masculinity-femininity. The research confirmed that high
power distance, high masculinity, and high uncertainty avoidance are indicative of higher corruption.
The author concludes that corruption is not easy to eradicate because culture cannot be changed
overnight.
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Gender differences. Cultural scientists such as Geert Hofstede claim that societies that are
characterized by masculinity, are by nature, more competitive and more ambitious in pursuit of
material wealth (Husted 1999). This particularly applies to males, who are considered as the primary
breadwinners of the household in such societies. There is evidence of a gender gap in
competitiveness, with males found to be more competitive than females (Niederle and Vesterlund,
2007). This contributes greatly to whether or not one may engage in unethical behavior such as
corruption.
While studying gender differences, Swamy et al. (2001)3 found that women were more likely to
condemn bribery, as compared to males. Moreover, based on a survey carried out in Georgia, the
authors found that male business owners are more likely to offer a bribe as compared to female
owners. These evidences support previous findings in different fields of studies, namely business
ethics and psychology, on the impact of gender on corruption (Eagly and Crowley, 1986; Ford and
Richardson, 1994).
However, Alhassan-Alolo (2007) finds that trends might have changed over time, with more women
entering the workforce. Using hypothetical scenarios and questions, he finds that females might not
show higher standards of ethical behavior, especially when exposed to environments with corrupt
opportunities and networks.
Contagious corruption. Using micro-level data from over 20 European countries, Lee and Guven
(2013) find strong contagion effects of corruption. Using a seemingly unrelated probit approach, the
author provides empirical evidence of how past experiences with corruption influence future
decisions and how the act of bribery is viewed. Thus a culture of bribery, as reflected by its
prevalence in a society and measured by past experiences, affects one’s willingness to bribe. Citizens
may thus rarely show any signs of guilt, while justifying bribery.
Likewise, Dong et al. (2012) use micro and macro-level data spanning almost 20 years to study
whether corruption is contagious. The authors found that the willingness to be corrupt is heavily
3 Swamy et al. (2001) use responses from the statement “someone accepting a bribe in the course of their duties” from the World Values Survey as their main measure of corruption. This measure is scored on a 1-10 scale where 1 indicates that the behavior can “never be justified” and 10 indicates that the behavior can “always be justified.”
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influenced by perception of how other individuals in the society are likely to behave4. At the macro-
level, it is found that past levels of corruption also determine current corruption levels in countries.
Social capital. Social capital refers to the inclination of people to cooperate in terms of common
values and norms which foster civic engagement. Social capital includes elements such as
interpersonal trust, and social networks that can lower corruption by reducing transaction costs,
facilitating market exchanges, promoting collective action, consequently lowering opportunistic
behavior and corruption (Lopez et al, 1997; Grootaert, 2001).
However, these same elements do not always produce positive externalities and are also crucial for
opportunistic behavior to occur and hence could work to promote corruption (Fukuyama, 2001).
Harris (2007), uses the World Values Survey to prove empirically that bonding social capital has a
negative impact on perceived corruption, confirming the hypothesis that exclusive ties between
individuals increases the likelihood of corruption and nepotism. She argues that in exclusive groups,
freedom of members is reduced, and those defecting to norms might be excluded from the group
and would incur a social cost that is too high for the defector. Moreover, in some contained
communities, the access to social resources may be available only to members of a group and denied
to outsiders, who may then be subject to additional charges or bribes (Bjornskov, 2003).
Institutional Trust. Studies reveal that citizen’s perception of corruption has a negative impact on
institutional trust. Della Porta and Vannucci (1999) assert that corruption lowers trust in political
institutions, and as a result reinforces higher levels of corruption. In a study of Latin American
countries, Seligson (2002) shows how higher levels of perceived corruption have an impact on how
democratic regimes are viewed. Similarly, in Asian countries, Chang and Chu (2006) find that higher
levels of perceived corruption are directly related to lower levels of institutional trust. Moreover,
Rose, Mishler and Haerpfer (1998) also find that higher levels of corruption have a negative impact
on how political systems are viewed.
4 Dong et al. (2012) use responses to the question ‘perceived share of compatriots accepting a bribe’ to empirically
quantify the magnitude of such contagion effects. They find that if perceived corruption rises by one unit (1 = almost
none, 4 = almost all), the percentage of persons reporting that corruption is never justified falls between 3.8 and 5.1
percentage points.
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3. Theoretical Framework
Corruption is widely defined as “the abuse of public office for private gain” (World Bank, 1997).
However, restricting corruption theories to the public sector and a principal-agent framework,
misses an important aspect of the phenomenon which jeopardizes most anti-corruption efforts. It is
important to note that corruption is not a feature of the public sphere only and neither is it always
initiated by a demander of bribes. Corruption has a supply side as well and the myth of individuals
being victimized by corrupt officials to pay bribes, calls for closer examination. Hence corruption
may be defined, in a very broad sense, as an illegitimate means to achieve a private goal. The
definition recognizes private gains as well as an abuse of power through illegitimate means.
3.1: Need vs Greed Corruption
In high corruption contexts, the differentiation between need and greed corruption is quite complex.
There is a very fine line that distinguishes between the two. It is important to note that these are two
extremes, black and white, and not all acts of corruption fall under either one end of the continuum.
There are shades of grey; the merits of which may be debated on a case to case basis. This is because
both need and greed are highly subjective in nature. Such cases do not fall under the scope of this
study and instead, we pay attention to objective forms of need and greed in order to better
understand the concept.
What is a need? A need is defined as anything, without which, one may not be able to fulfill basic
physiological requirements, such as air, water, food, clothing and shelter which may lead to an
undesirable outcome, such as dysfunction or death. A need is a need, only if everyone requires it to
function in society.
Poverty is a prominent feature of developing economies that lack risk-spreading mechanisms, such
as insurance markets, access to credit, and well-functioning labor markets (Schwenke, 2000). Such
economies are highly prone to risks such as unemployment, accidents and illnesses, which hurt the
poorer populations who may have to depend on corrupt practices as a coping mechanism. This
gives rise to need corruption, which occurs when an individual indulging in bribery, is motivated by
a genuine necessity, without which basic needs such as food or shelter are threatened. Stripping away
this coping mechanism may force the needy to indulge in other forms of crime such as burglary,
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robbery or smuggling. As long as developing countries are plagued with poverty, need corruption
may exist and perhaps may be tolerated as well, if it is considered as a lesser evil.
In terms of legality, need corruption occurs when a bribe is paid to receive a benefit that one is
legally entitled to (Bauhr and Nasiritousi, 2011). When bribe-givers attempt to receive a service they
are legally entitled to, the bribe-taker may not be able to extort an exuberant amount of bribe. Thus
need corruption is considered analogous to petty corruption. It is comparable to an act of giving a
service tip to a waiter to perform speedy services.
Need corruption also helps us understand why many people who confess to have been part of a
corrupt deal claim that they were ‘victimized’ or the situation ‘forced’ them to act in such a way.
Some, who claim to be victimized, may be generally law-abiding citizens, however in matters where
they face genuine needs they may be inclined to step over moral principles (Mauro 1998). Offenders
are often seen justifying their actions, with claims such as ‘the system made me do it’ or by finding
permissibility in situations, where it was necessary to right some other wrong such as red tape or
bureaucratic inefficiencies. To them, corruption is a rule that is so deeply entrenched in the system
that if they did not comply, they would be the ‘losers’. Indeed, there are situations where it may be
justified, especially when the need for human survival requires individuals to overcome institutional
or legal barriers.
The assumptions that some of such offenders hold, that corruption has benefits in an inherently
inefficient market system which requires overhauling, is swept aside by leading writers such as
Robert Klitgaard. He asserts that such assumptions and claims that corruption can be beneficial to
the functioning of an unfair market mechanism, serves no other purpose but to hinder ongoing
development and anti-corruption efforts (Klitgaard, 1998b). The question of whether corruption is
ever morally acceptable is one that needs further scrutiny. As deontologists argue, it is not the
consequences of actions that make actions right or wrong, but the motives of the person.
Nonetheless, either party to a corrupt act, being aware of the detrimental impact on society or not,
effectively conspire to defraud the public through illegitimate means. So those who stand on moral
grounds effectively argue that two wrongs do not make one right.
What is greed? Greed is a selfish or excessive desire, driven by a sense of deprivation, for more
than is needed, in terms of money, food, or other possessions. Likewise, those inflicted with such
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mentalities perceive that there might not be enough benefits to go around, and thus they should
indulge in a timely greedy act in order to benefit. For example, a greedy child will attempt to get the
biggest slice of the cake, and also try to be the first one to get it, as the child is inflicted with the
mentality that they might be left deprived from the benefits.
Greed corruption occurs when the motivation of taking a bribe is based on selfish desires. An
individual inflicted with a greedy mentality, perceives that if he/she does not indulge in corruption
and benefit from it, someone else will. Or that he/she may not be able to receive that benefit at all
because they cannot compete with other aspirants. Such scenarios are mostly present where the
demand of a public good is greater than its supply.
A greedy bribe-giver is one who wants to avail a service that he might not be legally entitled to (yet),
and thus instigates the bribing process. For example, a person bribes a public official, to receive a
benefit from a procurement contract. However, not all cases are as clear-cut as the previous
example. For instance, someone may supply a bribe such as speed money to get his/her application
for housing through on a priority basis, however that would require them to skip a queue. If the
person is not legally entitled to it, as yet, or does not fulfil the eligibility criteria, the act may be
classified as greed corruption.
Greed corruption is also asserted to be collusive in nature, where both the bribe-taker and bribe-
giver are considered as being in a position to fulfil selfish desires rather than necessities. In the case
of greed corruption, the bribe-taker demands bribes to enhance or maintain a lifestyle that is beyond
his/her means to do so, whereas the bribe-giver pays to receive an undue benefit. Such offenders are
possessed with the mentality to grab every single opportunity to either make extra income, achieve a
higher social standing or get hold of something they are not legally entitled to, as yet; just because
they can do it, and not because they need to do it.
This is why greed corruption is often termed analogous to ‘grand’ corruption’, which is built on
collusion, and is often unobtrusive because it is hidden and its costs are usually divided over a larger
amount of taxpayers. This is of greater concern because it includes larger amounts of money, due to
the larger risk involved because of the illegality of the act. This money is hoarded to avoid raising
suspicions and eventually may cause capital flight. Moreover, if corruption is indeed unobtrusive, the
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effects may not be felt directly by actors (in the short run) and hence may not create enough
motivation for actors to engage in activities against corruption (Bauhr and Nasiritousi, 2011). As a
result, anticorruption measures will suffer from a lack of “principals”.
3.2 Self-Selection and the Rational Choice Theory
The theoretical foundations of all criminological theories are given by the Rational Choice model.
The economic approach to corruption begins with a fundamental assumption, which may be termed
as ethically dubious, whereby self-regarding behavior is the major determinate of human decision-
making. The reason why corruption occurs should be clearly understood as a means to either sustain
a certain life-style or enhance it. Labor market theorists stress that workers tend to self-select
themselves into sectors and jobs that they feel may maximize their returns (Roy, 1951; Borjas, 1987).
It is based on a rational computation of benefits and costs of using specific skillsets in the presence
of an enabling environment. Applying the theory of self-selection, individuals may commit bribery if
the perceived risks are sufficiently low compared to the rewards.
Risk and rewards can be tied into the utility function of an individual. The decision to bribe or not
to bribe, involves the maximization of a utility function. If the marginal utility gained from indulging
in bribery is greater than the marginal utility of refraining from bribery, the individual will bribe.
Kaffenberger (2012) provides a simple utility model, where utility is a function of Service receipt (S)
and moral reward for behaving legally (L):
U = U (S, L)
The marginal utility of both goods is positive:
The income constraint is defined as follows:
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where, I is total income which is monetary income plus value of time, is the shadow price of
behaving legally, and is the shadow price of the service plus cost of bribes. These shadow prices
also reflect subjective risk and reward structures which are determined by a multitude of factors such
as cultural norms, moral standards, strength of anti-corruption bodies and punishment regimes, or
social taboos and stigmas. Lower corruption would imply lower shadow prices for both
commodities, and thus would enhance utility by expanding the income constraint outwards. The
individual would benefit by receiving higher service delivery at every point in the income constraint
for a certain level of legal behavior.
Assuming a Cobb-Douglas utility function, neutral preferences regarding bribe-paying would give
both S and L equal weights, producing a utility function as can be seen in Figure 1.1 on the
following page.
=
From this steady state, an individual’s life experiences, environment, culture and other factors affect
preferences and change the shape of the utility curves. For instance, moral and ethical training can
increase moral reward and thus make an individual prefer legal measures, placing a greater weight on
Figure 1.1 - Neutral Preferences (Kaffenberger, 2012: 24)
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legal behavior (a < b), changing the shape of the utility function. The utility function of such
individuals (Figure 1.2) reflects risk aversion, where moral standards are high enough to impose a
larger loss in utility from being caught, than the rewards from indulging in bribery. An individual will
prefer a legal means as long as it provides a certain payoff even if it is a lower expected payoff than
Figure 1.2 – Anti-bribery Preferences (Kaffenberger, 2012: 26)
Figure 1.3 – Pro-bribery Preferences (Kaffenberger, 2012: 28)
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behaving illegally. Even if the risks and rewards are equated, risk averse individuals may prefer not to
bribe because of loss aversion i.e. loss in utility has a greater negative impact on the individual than
the positive impact of an equal gain in utility (Kahneman and Traversky, 1979).
On the other hand, such factors may also have an opposite impact on preferences. For instance,
some societies may have higher levels of toleration for illegal activity, which lowers moral costs of
indulging in corruption. Such societies may also not be deterred by weak punishment regimes.
Individuals living in such societies place greater weights on service delivery (Figure 1.3), and lesser
weight on moral reward (a > b), and thus are more likely to bribe to maximize expected pay-off.
In high corruption societies, people may start to find more certainty in getting work done through
bribery than being uncertain about outcomes due to inefficiencies; especially when law enforcement
and anti-corruption bodies are not effectively implementing rules and regulations. This is further
aggravated when bribes become customary and part of the culture; as a tit-for-tat arrangement
between agents improving social standings amongst themselves.
In short, whether or not an individual tends towards corruption depends on subjective rates of risk
and reward which are shaped by individual experiences, environments, cultures and other factors.
Due to the fact that perceived risks and rewards are subjective in nature, the rational choice theory
supports the theory of self-selection. The labor force, thus, should be somewhat receptive of
opportunities where they could improve their lifestyles and future rewards. This influences the
decision-making process, by either increasing rewards or reducing risks, or vice versa.
The decision to offend is seen as a multi-stage decision process, where reasoning purely exists to
secure ‘generalized needs’ at least cost to the offender. A decision-making approach to crime
requires that a distinction between criminal involvement and criminal events be elucidated.
Involvement refers to the processes through which individuals determine their ‘readiness’ to be
involved to carry out a certain act, to continue and to desist. Involvement decisions are multi-stage,
extend over significant periods of time, and make use of large range of information. Whereas event
models, depict the further sequence of decision making that leads the individual to seek out
opportunities to carry out the act. These decisions are based on a relatively narrower scope of
variables than those in involvement models. In event models, the variables at play largely reflect
immediate situational factors in terms of effort, risks and rewards (Cornish and Clarke, 2000). We
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focus on the involvement model, as that is where the ‘readiness’ or willingness to be corrupt is
formed.
3.3 The Decision-Making Process
The involvement process has two decision points: the decision to be ready, and the decision to
Figure 1.4 – Involvement Model of Decision-Making Borrowed from Cornish and Clarke (1985: 168)
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commit the act. The first decision point involves identification of needs and desires, evaluation of
means in light of moral considerations, and the establishment of willingness. If criminal means are
selected, then the individual is said to be ready to offend. As seen in Figure 1.4, background factors
are at the helm of the decision-making process. Background factors include psychological factors,
socio-economic factors, demographic factors, and quality of upbringing. These background factors
are a crucial part of our study as these largely determine the motive behind the corrupt act.
Once, the motivation is determined, moral considerations come into play, which act as a self-
selection mechanism which trigger the crime. In a general theory of crime, Gottfredson and Hirschi
(1990) propose that the individual trait of self-control or restraint explains most deviations in human
behavior. The authors assert that, in pursuit of self-interest and given the opportunity to do so,
individuals lacking self-control may indulge in wide forms of crime. Self-control is what determines
whether an individual will transit from readiness to commission of crime.
Low self-control is a multi-dimensional term which is captured by behavior which reflects
impulsivity, short-term orientation, high propensity to consume, preference for leisure, self-
centeredness, risk-seeking potential and a volatile temper (Grasmick et al. 1993; Roach, 2009).
Preference is given to immediate benefits derived from consumption activity. As a result of a
neglected focus on long-term benefits, low self-control individuals suffer from poor friendships, low
success in educational and economic arenas, and unhappy marriages (Gottfredson and Hirschi,
1990). Susan Rose-Ackerman (1978) highlighted the importance of restraint in preventing
corruption, and such restraints find its roots in ethical considerations, namely honesty and a
commitment to democratic principles.
4. Methodology
Due to the increasing use of technology in processes, and collection of new data, many new
interesting insights are available on the phenomenon. However, the research has expanded out into
so many intellectual directions that studying corruption still remains a very perplexing job. It is a
challenging task, to measure the level of corruption in a society, as people prefer not to be part of
studies that attempt to gauge corruption or corruptibility. The sensitive nature of research in this
field requires the design of an oblique methodology. While some respondents will happily disclose
their perceptions about the extent of corruption in the society, not many are expected to confess
whether or not they would indulge in corruption, given a chance. The methodology adopted in this
17
paper is unique in the sense that no previous study (in our knowledge) has been carried out to
directly measure corruptibility from a micro-level perspective.
Only recently, in the past decade and a half, survey questionnaires have started being used as an
effective way to measure corruption. Researchers have empirically examined cross-country
differences in corruption, using micro-level surveys that feature questions on offering or accepting
bribes, past experiences and acceptability of various deviant behaviors. Depending on what
questions are asked and how the questions are framed, surveys can prove to be very useful to
understand corruption from a micro-level perspective. Surveys have allowed identification of where
corruption is most encountered by the population and also capture how various groups of
population perceive corruption. These have proven useful in helping evolve the debate on
corruption from anecdotal assertions to empirical evidence.
Keeping the above factors in mind, we have designed a survey which aims to study whether
corruption is influenced by need or greed. The survey allows measuring corruption and
corruptibility, in a manner not extensively used before. It allows measuring, to some extent, the
spread of corruption in society. For instance, it is highly unlikely that the same corrupt deal may be
witnessed by more than one person in a random sample. If over 60% of respondents have claimed
to have been in a corrupt act in the past year, or have at least witnessed a corrupt act, then it is not
radical to claim that corruption is indeed widespread.
Other than being able to give a quantifiable estimate on the extent of corruption present in a society,
the study primarily focuses on determining whether demographic, socio-economic, psychographic,
cultural and/or environmental factors matter in determining the extent to which a person is
susceptible to corruption. Doing so, it distinguishes between factors that may cause either, need or
greed corruption.
Model
As we saw from the involvement model of Cornish and Clarke (1985), the decision to offend is a
multi-stage process and a function of the following factors:
18
The decision to offend = ƒ(background factors, previous experiences and learning, generalized
needs, moral considerations, available solutions, and situational factors)
Background factors include socio-economic conditions, and psychological factors. Generalized
needs include social and culturally approved goals such as money, status or excitement. Moreover,
moral values play an important role as a self-selection mechanism, in determining whether or not a
person chooses a corrupt solution. Past experiences with corruption is found to have a significant
impact on one’s willingness to indulge in corruption as well as one’s views on corruption. Hence a
past experience with corruption can impact the decision-making process by enhancing available
solutions, thus making it more likely that an individual chooses a corrupt means to reach a goal. It is
possible that a person who has previously been involved in corruption, may indeed have lower
thresholds of morality, may justify corruption and thus may be inclined to indulge in a corrupt act
again. Situational factors include immediate factors present in an individual’s life that may influence
a corrupt decision.
Keeping the above in mind, we estimate variants in demographic, socio-economic, psychographic
and environmental factors at the micro-level. The decision to offend is captured by the responses to
the questions which ask the respondents whether or not they would give or take a bribe. This shows
the willingness of the respondent to indulge in corruption which can be translated into propensity or
probability of an individual to be corrupt.
We estimate the following:
… (4.1)
where, is the probability of the ith individual to indulge in corruption, represents personal
characteristics which include demographic, socio-economic and psychographic factors;
represents environmental factors faced by the individual; and represents experiences of the
individual with corruption.
We estimate multivariate probalistic models, where the probability of the discrete event of a
respondent willing to give or take a bribe (and hence be corrupt) can be modelled as a logit/probit
relationship.
19
Empirically, we estimate the following:
… (4.2)
{
}
where, X is a vector of personal responses of individual i,. The outcome variable, willingness to give
or take a bribe, takes on the value of one if individual i is willing to give or take a bribe and zero if
otherwise.
Estimation Technique
We ran multiple binary logistic regressions to have a closer look at the survey results to determine
what factors increase the probability of a respondent to self-select themselves towards corruption.
Binary logistic is a type of regression analysis where the dependent variable is a dichotomous dummy
variable. It is simply a non-linear transformation of the linear regression. The logistic distribution is
an S-shaped distribution function which is similar to the standard normal distribution and constrains
the probabilities to lie between 0 and 1. With the logistic transformation, we fit the model to the
data better. Once transformed, the log-odds become linear.
The model was built using backward and forward stepwise techniques, where individual variables are
added to the model one by one and its impact is studied on overall model fit and the existing
variables. This procedure is constructed by an iterative maximum likelihood procedure. It starts with
arbitrary values of the regression coefficients and constructs an initial model for predicting the
observed data. Then it evaluates errors in such prediction and changes the regression coefficients so
as to make the likelihood of the observed data greater under the new model. This process repeats
until the model converges, meaning the differences between the newest model and the previous
model are trivial. The idea is that you find and report as statistics the parameters that are most likely
to have produced the data. A rudimentary model was created to incorporate basics of the theoretical
model, to include personal characteristics, environmental factors and experience with corruption.
Corruption = ƒ (gender, age, years of schooling, household income, marital status, materialism,
bribe justification and institutional trust) … (4.3)
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Age, years of schooling, and institutional trust are continuous variables, whereas dummies were
introduced for males, married respondents, materialists, those who felt income was inadequate, and
those who justified bribery. Household income was replaced by average monthly electricity
expenditure as it was a more suitable instrument to gauge socio-economic status as compared to
income which respondents are reluctant to share. So, in order to get a better understanding of the
effect of household income on the probability to indulge in bribery, we used ‘Average Electricity
Expenditure per month’ to create a new ordinal variable - socioeconomic status - based on usage,
the values of which range from 1-3, where 1 is the lowest socio-economic group, and 3 is the
highest. Lastly, materialism, measured on a 6 point scale, was transformed into a binary variable,
materialist, where 1 indicates presence of a materialistic personality and 0 otherwise.
Corruption = ƒ (male, age, age squared, years of schooling, socioeconomic status, income
inadequacy, married, materialist, bribe justification, and institutional trust) …(4.4)
Hypothesis
The study primarily studies determinants of corruption, while attempting to ascertain the type of
corruption, need or greed that is present in the society. Due to the extreme level of poverty in
Pakistan, need corruption is, without doubt, highly prevalent in society. What is of greater concern is
the prevalence of greed corruption. We test the following hypothesis:
: Corruption is not motivated by greed.
: Corruption is motivated by greed.
As mentioned earlier, the need-greed distinction is primarily derived by studying socioeconomic
factors impacting the individual. Income is the most influential factor determining this outcome.
Low income would increase the probability of being corrupt, as it introduces the element of need.
The lower the income, the higher the chances of need corruption. So if corruption is motivated by
need, we expect that corruption will reduce as people climb the ladder of socioeconomic status.
The definition of a need, as defined in this study, allows us to side-step classic economic theory
which asserts that needs increase with income. Even though it is true, in the sense that people move
21
up a hierarchy of needs5, we are more concerned with those who indulge in corruption because of
lack of basic and genuine needs. Moreover, as mentioned earlier, need is a highly subjective variable,
and we are only concerned about objective needs. In the following hypothesis, we are thus simply
trying to establish whether or not those who belong to higher socio-economic groups are more
willing to indulge in unethical behavior, as compared to those who are not so fortunate.
: Higher SES individuals are not more likely to be corrupt.
: Higher SES individuals are more likely to be corrupt.
Moreover, financial constraints perceived by the individual, such as the feeling that current income is
inadequate would increase the probability of a person to indulge in corruption as a source of
income. This could be a sign of either need or greed corruption. Need corruption occurs because of
this very feature of the thought process of the needy. However, it is important to note that greedy
people also feel that their income is not enough to sustain their current lifestyles. Enough is never
enough for people inflicted with such mentalities.
: Those who feel that their income is inadequate are not more likely to indulge in corruption.
: Those who feel that their income is inadequate are more likely to indulge in corruption.
Moreover, a materialistic outlook or a strong desire to always want more, may increase the likelihood
of a respondent to indulge in greed corruption. This is linked to the previous hypothesis, as it
attempts to ascertain the root of the desire for needing or wanting more.
: A materialistic personality does not increase the likelihood of being corrupt.
: A materialistic personality increases the likelihood of being corrupt.
Lastly, marriage is expected to have an impact on the probability of being corrupt. It could either
reduce corruption, by instilling a sense of responsibility and a fear of getting caught. Or it could
promote corruption as it increases social pressures from within the household. This form of
corruption could be either, need or greed corruption, depending on the nature of the social
pressures. Even though need corruption is somewhat justifiable, the decision of a needy person to
5 Maslow’s Hierarchy of needs establishes 5 levels of needs: Physiological, Safety, Love and belonging, Esteem and Self-actualization. He asserts that when one feels that their needs at a certain level are met, he/she advances on to a next set of needs, until reaching self-actualization.
22
get married is a matter that is questionable. On the other hand, the nature of the social pressures
could be entirely based on desires rather than necessities. Combining the above two hypotheses, we
are trying to ascertain whether or not there is a demonstration effect at play, and if so, how
significant is marital status in determining that outcome.
: A married person is not more likely to be corrupt.
: A married person is more likely to be corrupt.
Covariates
Gender - The probability of being corrupt is expected to be higher for males because of higher
exposure and opportunities, and achievement-oriented outlook of males.
Age - The relationship with age is expected to be positive for younger people and negative for those
who are older. Overall this relationship should be negative, which implies as a person grows older,
the probability of being corrupt reduces.
Years of schooling - Years of schooling is expected to reduce the probability of being corrupt as
more educated people are more aware of the social costs of corruption.
Trust in institutions – A lower trust in institutions can increase the probability of indulging in
corruption. Especially judicial trust and trust in anti-corruption bodies.
Bribe Justification – A respondent who justifies the use of proscribed means, is more likely to
indulge in corruption. A past experience with corruption may increase the probability of one
indulging in corruption again and also increase the probability that the person justifies the act. This
signifies a weakness in moral values.
5. Results
Almost a third of the variation in the responses were accurately captured by the model, and the null
hypothesis of the Hosmer and Lemeshow test – the model is fit – is not rejected. A test of model
coefficients (Table 1.1) reveals that the model is highly significant (p < 0.01). Moreover, Table 1.2
shows that the model predicted the right outcome nearly every three out of four times (71.1%).
23
Without the dependent variables, the model predicted the outcome 61.4% of the times. Hence, the
addition of variables has significantly improved the predictability of the model.
Table 1.1 - Omnibus Tests of Model Coefficients
Chi-square Df Sig.
Step 1
Step 39.925 10 .000
Block 39.925 10 .000
Model 39.925 10 .000
Table 1.2 – Classification Table
The estimates of multiple regressions are presented in Table 1.3 on the following page. The beta
coefficients represent log-odds of the outcome and the sign of the coefficient represents its
relationship with the outcome variable. The log-odds are not easy to interpret and only help in
building the statistical model to be tested. A better interpretation is carried out by looking at the
odds-ratio calculated by taking the exponential of the log-odds. A direct interpretation of the values
in this column is taken as ‘a unit increases in the independent variable increases the likelihood of
corruption by ‘Odd-ratio’ times.’ Or alternatively, subtracting 1 from the odds-ratio gives us the
likelihood in percentage terms. For categorical and binary variables, these can be directly be
interpreted as odds ratios between two different groups. Odds-ratios below 1 indicate a negative
relationship and may be interpreted by inversing the ratio.
Table 1.3 – Regression Analysis
Dependent variable = Corruption (defined as those willing to give or take a bribe)
DESCRIPTION Beta Odds-Ratio
CONSTANT 1.805 (.574)
6.080
MALE .804* (.068)
2.234
AGE -.233* (.173)
0.792
AGE^2 .003* (.169)
1.003
Observed
Predicted
Corruption Percentage Correct
0 1
Corruption 0 82 20 80.4
1 28 36 56.3
Overall Percentage 71.1
24
YEARS OF SCHOOLING -.126* (.090)
0.882
SOCIO-ECONOMIC STATUS .605* (.077)
1.831
INADEQUATE INCOME 1.289***
(.002) 3.631
MARRIED .924** (.036)
2.521
MATERIALIST .852** (.043)
2.345
BRIBE JUSTIFICATION .962** (.021)
2.618
INSTITUTIONAL TRUST -.478* (052.)
0.620
Nagelkerke R Square 0.290
Hosmer and Lemeshow Test 0.568 (p) Values in brackets represent p-values.
* - 10% significance level, ** - 5% significance level, *** - 1% significance level
Demographics
As theorized, males are found to be more likely to indulge in corruption than females. Being a male
respondent increases the likelihood of indulging in corruption by 2.234 times and is significant at the
10% level.
Age has a negative relationship with the outcome, implying that as age increases the likelihood of
being corrupt falls. A one-unit increase in age decreases the likelihood of indulging in corruption by
1.36 times. The variable age squared, which measures the rate of change in the variable age, is positive
which implies that as age increases, the likelihood of indulging in corruption decreases at an
increasing rate. However, both age and age squared are not statistically significant, possibly due to a
relatively small sample size.
Socio-economic Factors
Average electricity expenditure indicates the level of economic activity in the household, and is a
good proxy to gauge socio-economic status of a respondent. The results indicate that electricity
expenditure has a positive relationship with the outcome variable, which implies that as socio-
economic status of a household increases, the likelihood of the respondent to be corrupt also
increases. A unit increase in socio-economic status measured on a scale of 1-3, increases the
25
likelihood of corruption by 1.831 times. This is indicative of greed corruption. The second
hypothesis that higher SES individuals are not more likely to be corrupt, is hence rejected.
Inadequate Income. Respondents who believe that their income is inadequate to sustain their
lifestyles are also more likely to indulge in corruption, as compared to those who are satisfied and
feel that current income is adequate. Feeling income inadequacy increases the likelihood of indulging
in corruption by 3.631 times and this relationship is significant at the 1% level. The third hypothesis,
that those revealing income inadequacy are not more likely to be corrupt is rejected.
Years of Schooling. As advocated earlier, years of schooling has a negative relationship with
corruption, implying that as years of schooling increases the likelihood of indulging in corruption
reduces. A one-unit increase in the years of schooling decreases the likelihood of indulging in
corruption by 1.13 times. In other words, a one-unit increase in years of schooling reduces the odds
of indulging in corruption by 13%. This relationship is significant at the 10% level.
Psychographics
Materialism. Materialism is also found to have a positive relationship with corruption. Being a
materialist increases the likelihood of indulging in corruption by 2.345 times and is significant at the
5% level. The fourth hypothesis that a materialistic person is not more likely to indulge in corruption
is rejected.
Bribe Justification. Those who justify bribery also tend to be more likely to indulge in corrupt
behavior. Moreover, those who have indulged in corruption in the past are also more likely to justify
bribery. The likelihood of giving or taking a bribe is 2.618 times more than those who do not justify
the act. This relationship is significant at the 5% level.
Environmental Factors
Marital Status. Marital status is also found to be a significant variable impacting the decision to be
corrupt. Married respondents were found to be 2.521 more likely to indulge in corruption than those
with other marital statuses, significant at the 5% level. The fifth hypothesis that married respondents
are not more likely to indulge in corruption is rejected.
26
Institutional Trust. Trust in institutions is found to have a negative relationship with corruption,
implying that as trust in institutions increases, the likelihood of indulging in corruption decreases.
Measured on a 6-point scale, a one-unit increase in trust decreases the likelihood of indulging in
corruption by 1.61 times. Alternatively, the odds of indulging in corruption reduces by 61%, with
every one-unit increase in trust. This relationship is significant at the 10% level.
Moderation Analysis
A moderation analysis was also carried out to examine if there are any significant interactions
between the covariates. This analysis attempts to gauge whether the effect of an independent
variable on the outcome variable depends on another set of independent variables. For example, the
effect of marriage on corruptibility may depend on household size. Or effect of age on corruption
may depend on years of schooling.
A correlation matrix of all independent variables revealed that the following set of variables are
correlated: Age & Years of Schooling, Age & Married, Income inadequacy & SES. We tested for
interactions effects between these set of variables, however we found none. Moderation analysis was
also conducted on other possible and logical interactions to examine whether there are any uncalled
for effects6.
Mediation Analysis
A mediation analysis attempts to study whether there are mediator variables that impact the
outcome variable. A mediator can be any variable which is assumed to be an outcome of a causal
variable, and which may carry the influence of the causal variable onto the dependent variable. The
flow chart below explains how mediation works.
There are three pre-conditions to run such an analysis (Figure 1.5). Firstly, the predictor variable (X)
must be predicting the outcome (Y) significantly. Secondly, the predictor should also predict the
mediator (M) variable significantly. Lastly, the mediator variable should predict the outcome variable
controlling for the predictor variable. So paths a, b and c should be statistically significant. Path c’
shows the effect of the predictor on the outcome controlling for the mediator variable. If path c’
reveals that the addition of the mediator variable reduces the main effect of the predictor variable,
6 See Appendix for regression results with interaction terms.
27
then mediation has occurred. If path c’ indicates a non-significant relationship, that would imply
complete mediation.
From the regression analysis, we know that those who justify bribery are more likely to indulge in
corrupt behavior. This relationship may be mediated by a past experience with corruption. So those
who justify bribery, may have probably given or taken a bribe in the past, hence they may be more
likely to indulge in bribery again. The predictor variable, justifies bribe, predicts the outcome variable,
corruption, and the mediator variable, experience. Running a statistical analysis as advocated by Barron
and Kenny (1986), we find that introducing the mediator variable reduces the beta coefficient of the
predictor variable from 1.190 to 0.897. Hence we can assume that mediation has occurred. Further
statistical analysis using the Sobel Test, which requires unstandardized regression coefficients and
their respective standard errors, confirms the previous statement that the mediation is significant (p
< 0.05).
Similar to the mediation analysis of Piff et al. (2012), we attempted to check whether or not unethical
behavior in high socio-economic groups is partly mediated for by a favorable view of bribery. Most
authors have claimed that the first step of Barron and Kenny’s analysis may be over-ruled, and there
need not be a significant relationship between the predictor variable and the outcome variable to
start with, as long as the next two steps are significant i.e. predictor variable predicts the mediator,
and the mediator predicts the outcome variable controlling for the predictor variable. So although
Figure 1.5 – Mediation Effect
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socio-economic status, in isolation, is not a significant predictor of indulging in corruption, we can
still test for mediation. The relationship between socio-economic status and bribe justification was
found to be positive and significant, indicating that higher socio-economic groups have a relatively
favorable view of bribery than those belonging to lower groups. We also found that bribe
justification is a healthy predictor of whether or not a person indulges in corruption. The last step of
the analysis reveals that there is a mediation effect, when socio-economic status is regressed against
the outcome variable controlling for bribe justification. The beta coefficient changes significantly as
re-affirmed by the Sobel Test (p < 0.05).
We also attempted to find mediation effects in other variables such as marriage and household size.
Married individuals were found to be more likely to indulge in corruption. This may be mediated by
the fact that marriage increases household size, increasing social pressures, which may in turn lead to
higher probability of indulging in corruption. However, statistical analysis reveal no mediation effect,
implying that household size does not have an indirect effect on how marriage effects the choice of
indulging in corruption.
Furthermore, the feeling of income inadequacy also increases the likelihood of indulging in
corruption. This relationship may be mediated by an individuals’ SES. Those who feel income is
inadequate, probably belong to lower SES groups, and hence are more likely to indulge in bribery.
However, again, we find no such mediation effect, indicating that SES groups do not have an
indirect effect on how income inadequacy effects the choice of indulging in corruption.
6. Discussion
The results in the previous section are quite revealing. All hypotheses tested were rejected, indicating
that corruption is mainly motivated by greed in the study sample. Using objective measures to gauge
SES, we find that higher SES groups were more likely to indulge in corrupt behavior. Moreover,
mediation analysis also revealed that this behavior is partially accounted for because of a more
positive outlook towards bribery.
It was also found that respondents who believe their income is inadequate are also more likely to be
corrupt. As we saw earlier, the feeling of income inadequacy was correlated with a strong sense of
desire to want more than one already has, even after getting what they need. This is a sign of greed
29
corruption, because greed is also defined as a selfish desire to always want more. It is important to
point out that the study sample is a relatively well-off group lying in upper middle income brackets
with average household income of PKR 150,000. About 58% of the sample revealed that their
income is still inadequate, which may point towards ungratefulness with what one currently is
endowed with.
Materialism and Demonstration Effect
While studying corruption and economic growth in Nigeria, Elijah (2007) concludes that a culture of
materialism and ‘get rich quick’ promotes corruption. We find similar results in the study where
respondents with materialistic personalities were found to be more likely to indulge in corruption.
Exposure from mass media has fueled the rising aspirations of the people, by publicizing the wealthy
and allowing a culture of flamboyant living to creep into the society. Heavily influenced by the
lifestyle of the West, the aspirations of the Pakistani society seem to be rising rapidly as well.
Moreover, the motivation behind these aspirations are mostly selfish rather than altruistic. A lob-
sided emphasis on the achievement of private goals at the expense of common goals is further
indicative of the use of proscribed means. It is important to note that rising aspirations per se are
not undesirable, and instead it is the rate of change in these goals which outpace the institutionalized
means, that is of greater concern (Anwar, 1980).
Additionally, more than half of the study sample revealed opportunistic behavior, whereas about
62.4% of respondents also revealed a relatively high discount rate, preferring consumption over
investment. In a society where today’s consumption is preferred over tomorrows’ – a high subjective
discount rate and high propensity to consume - people attempt to achieve their goals in the shortest
possible time. Individuals aspire and daydream of ways to instantly become rich. Opportunistic and
greedy individuals tend to be on the lookout for such opportunities to advance themselves.
However, due to a lack of emphasis on the institutional means to achieve cultural goals, deviations
occur. Hence, they may not hesitate to follow technically efficient means, for instance a bribe, rather
than institutionalized means, when the latter carry higher transaction costs. Over time, as this
practice continues, the technically efficient means may become widely accepted causing corruption
to be institutionalized as well.
30
It is also argued that corruption usually starts from the wealthy and powerful. Following the role-
model of the upper class, people from relatively lower classes also adopt similar means to attain
cultural goals. For example, when one of the richest businessmen of the country confesses on
national television that he uses money to ‘grease the wheels’ and get work done, this has a
trickledown effect on those looking for opportunities and shortcuts. Taking the wealthy as a
reference group, the common man then tries to become as close to this model as it is possible within
his limitations. The fantasy of living the same lifestyle may then cause the individual to employ the
same exploitative approach as adopted by their reference group, especially in the absence of an
effective opportunity structure (Anwar, 1980).
The demonstration effect has played a significant role in embedding such values. Robert Merton
hypothesized that some social structures create pressure upon people in society to indulge in deviant
behavior (Anwar, 1980). It cannot be denied that materialistic desires are derived from social norms
around an individual. There is certainly a high chance that a subordinate wishes to enjoy the luxuries
of the boss. Likewise, if owning a car is a culturally accepted goal then individuals lacking that luxury
will be pressurized to attain the goal, perhaps from within the household. Since we found married
individuals to be more likely to indulge in corruption, and a negative relationship of household size
with the outcome, we can conclude that social pressures arising from within the household have
nothing to do with the fulfilment of basic necessities. Instead, it may be the case that the
demonstration effect is strengthened, by a strong longing of the male breadwinner to fulfil his
partner’s desires for jewelry, cars, gadgets or perhaps an expensive honeymoon package. This trend
is even more so prominent in higher SES societies, where the membership of a closed group
requires ownership of expensive and flashy gadgets.
Do Demographics Matter?
Another revelation from the analysis is that demographics do matter when we study corruptibility.
Supported by many previous findings, gender does play an important role in determining whether or
not a person may indulge in corruption, with males found to be more corrupt than females. Keeping
this in mind, female quotas in organizations are hence very important to ensure a healthy gender
balance, to improve working environment and reduce opportunistic behavior.
31
Moreover, age was found to have a negative relationship with the willingness to indulge in
corruption. As age increases, the willingness to be corrupt reduces at an increasing rate. This is
possibly because with age comes maturity, which sparks the realization of the value of reputation
and credibility in society. Hence one would be deterred from any risky act that may damage their
image. Additionally, in monotheist societies, one may become more God-fearing as they approach
an inevitable end.
Cross-tabulations7 indicated that the age group of 26-35 years is highly vulnerable to corruption.
This age group represents those who have newly entered the workforce, and are at early stages of
their careers. They are generally ambitious, have lower self-control and are not that aware of the
cons of corruption and how it can affect their career. It is important to note that majority of these
lower aged respondents, who are susceptible to corruption, belong to higher SES groups. We do not
claim that lower aged individuals have high earnings just because they belong to higher SES groups.
Our findings may be in line with the age-income hypothesis where lower aged individuals are more
likely to have lower incomes and thus are more likely to indulge in corruption. This is because
individuals belonging to higher SES groups, with high household income, may possibly have lower
personal disposable income and thus are more likely to use their influence in society to indulge in
unethical behavior.
7. Policy Implications
Lack of ‘Principled Principals’
In high-corruption societies, where corruption becomes a societal norm, there will be a collective
action problem of the second order (Ostrom, 2000), which means that there will always be a lack of
principals ready to enforce legislation or act as whistleblowers. Most policies are formulated from
the perspective of the principal-agent framework, where it is assumed that honest principals are
ready to act in the best interest of the public and it is their inability to monitor agents that allows
opportunistic behavior to flourish. However, the principal-agent approach to address the issue of
corruption, which includes improving monitoring and transparency, might in fact risk increasing the
level of corruption by exposing more illegitimate acts, as it reinforces existing beliefs about the
prevalence of systemic corruption. If the fundamental conditions of why anti-corruption measures
7 See Appendix for Cross Tabulations.
32
are in place are not met, steps will be futile and will not give expected results, especially when those
expected to enforce legislation are either corrupt or afraid of the consequences of displaying moral
heroism.
In high-corruption societies, where corruption is already systemic, most people expect everyone else
to be corrupt, and thus are not motivated to act in good faith. It gives birth to a mentality where one
believes that if they do not benefit from corruption, someone else is bound to benefit from it. The
public kitty then becomes in factual sense, a public kitty, which everyone tries to steal from for their
own selfish reasons. As a result, a lack of ‘principled principals’ will cause monitoring and
punishment regimes to be futile, as no one may have any incentive to enforce legislation (Persson et
al, 2013).
Lax Institutional Trust
Trust in major institutions also dictate how a person may act or perceive others may act in a given
situation. For instance, high trust in the judiciary reflects the choice set of the individual to include
legal means when deciding how to address an issue. So when institutional trust deteriorates these
possible choice sets may be minimized to only include illegal means. Lack of trust thus may
transform an otherwise law-abiding citizen into a briber who may use networks to exploit rent-
seeking opportunities. So erosion in institutional trust has a worsening impact on corruption and
efforts to control it. Even though the direction of causality is still debated, it is known that mistrust
and corruption practically breathe life into each other creating vicious spirals, pushing the economy
to a high-corruption equilibrium (Cho and Kirwin, 2007). Moreover, a lack of trust in elected
governments, who promise to eradicate corruption, leads the public to reject these promises,
undermining the efforts of governments to fight corruption as a collective action problem.
Education
Corruption is a social phenomenon, which can be controlled if people learn what their rights and
duties are towards society. Practical measures, as advocated by experts such as Klitgaard (1998), to
control or prevent corruption in the shape of monitoring, transparency and accountability reforms,
are necessary conditions, but not sufficient to curb the menace in a high-corruption context. In this
sense, a sufficient condition that guarantees positive results, would be the inculcation of strong
democratic values and civic virtue, which becomes an impetus for attitudinal reforms. Since
33
education plays a significant role in the decision-making process, ethical training programs at early
stages of the career might be beneficial in instilling moral values and creating awareness of the social
costs of corruption and how it may impede career growth.
Such findings also highlight the need to be careful in selection and recruitment processes to root out
‘Bad Apples’ from the system. Mohammad Ali Jinnah, when consulted by the Royal Commission on
the issue of raising the upper age limit from 21 years to 24 years for recruitment in the Indian Civil
Service in 1913, replied that he did not support extension in the upper age limit by even a day. His
advice was to insulate, at a young age, those who choose to come into public service, from market-
oriented financial incentives, lest they get mal-adjusted in life. Public service jobs have lower salaries
because they come with prestige as well. So young individuals, already exposed to charms of money
may not be able to adjust to the lower salaries and be more likely to indulge in corruption.
This is of utmost importance because more than half of the population of Pakistan is under the age
of 24, and approximately two-thirds under the age of 30. The youth need to be utilized in the most
effective manner, in order to be able to reap the demographic dividend in this Golden Age that the
nation has entered into. If this youth bulge is neglected, the consequences will be disastrous. Policy
needs to focus on targeting and grooming the youth in schools, colleges and universities, through
programs such as awareness campaigns. Additionally, school enrollment ratios have to be drastically
improved so that education becomes a societal norm rather than corruption.
‘A New Game in Town’
Keeping in mind the logic of the collective action approach, the dominant approach would be to
change citizens’ beliefs about what other actors are likely to do when faced with an opportunity. A
radical change in mindset is required, so that most actors expect others to play fair. It is noteworthy
to point out that the most common excuse for corrupt behavior was that ‘others would do the
same’. Measures such as the establishment of ‘Bribe-Free Zones’ in busy public offices, may alter
public perception about norms in the specific area, forcing actors to behave in a conforming
manner.
Recent examples of Hong Kong and Singapore are inspiring as they made the shift from high-
corruption equilibriums to low-corruption equilibriums in a relatively short period of time. These
34
examples reveal what Linz and Stepan (1996) labeled as the “new game in town” which was
practically a blend of formal and informal tools of control. It was duly noted that honest officials
serving as role models at the helm of the system was a characteristic common to countries that have
successfully dealt with the problem.
In view of the current political scenario of Pakistan, indeed the movement by major political leaders
is eye-opening and helps in creating awareness of the range of problems facing the country; however
the message being given out might have a detrimental impact on the problem that needs to be
addressed. The negativity of the message that the helm of the system is maliciously corrupt, forcing
people not to pay taxes or utility bills, may encourage further corruption. When political leaders feel
that public sentiments are against them, making their re-election doubtful, they may be tempted to
be corrupt and loot the system in the little time that they have.
High profile cases of mega corruption are on a receding trend though, due to high social awareness,
media pressures and the strengthening of NAB. Using this as a healthy platform and a starting point,
a revolutionary movement, with a message to the public that most other people could actually be
trusted to be honest, may have a positive impact on one’s willingness to be corrupt. Realistically, this
would be no easy task. But if there is a time to tackle corruption, it is now, and as many studies have
pointed out, this phenomenon can only be dealt with by a large and consistent push.
8. Limitations and Further Research
A major limitation of the study is that the subjects chosen for the survey mostly belong to urban
locations, are those who understand English, and are relatively better off and well-educated. As this
does not reflect the profile of the universe, we cannot claim that our findings are generalizable to the
entire population. Hence the scope of the study is limited to select urban populations.
We also encountered multiple types of biases in the study. Conducting surveys that ask direct
questions on socially undesirable acts is not an easy task, hence we expected social desirability and
non-response bias. We attempted to minimize such biases by guaranteeing anonymity but we
received no guarantees of unbiased responses.
35
Moreover, the sample was biased towards younger aged respondents particularly males, who
revealed greater willingness to be part of the study. This was partly because younger aged
respondents were relatively more accessible and available to be part of the study. Likewise, female to
male ratios in workplaces is considerably low hence majority of the respondents were males.
There is also room for improvement in the survey questionnaire; redundant questions could be
replaced with more appropriate ones to improve content validity in terms of convergence and
divergence. Moreover, the quantification of qualitative variables and clarification of ambiguities
between need and greed corruption requires an inter-disciplinary approach which may bring in more
accurate results. Currently, there is no appropriate framework that exists in this regard, and this
study is only an attempt to relay one of the many possibilities of how the research question may be
tackled.
Considering the limitations above, this may be taken as an experiment and further research could
explore whether there are any significant differences between participants from different sections of
the society. For instance, the same survey conducted in a local language in rural areas, may yield
completely different results. This is because the definition and toleration of corruption varies
between cultures and social classes. In a country with multiple cultures, the diverse workplace and
rising migration trends require focused studies as such, which may give a better understanding of the
problem at hand. As it is, this study is expected to generate more heat than light. Nonetheless, we
can claim that the research highlights a few interesting findings, and does point to an area for further
research, often ignored by writers on the subject.
36
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Appendix
Cross-Tabulations
Age * Corruption
We created 5 different age groups with equal intervals: 16 to 25 (1), 26 to 35 (2), 36 to 45 (3), 46 to
55 (4), 56 and above (5).
Table 1a – CORRUPTION * AGEGROUP Crosstabulation
% within AGEGROUP
AGEGROUP Total
1.00 2.00 3.00 4.00 5.00
CORRUPTION 0 72.0% 58.8% 68.4% 60.0% 75.0% 62.4%
1 28.0% 41.2% 31.6% 40.0% 25.0% 37.6%
Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Education * Corruption
We created 5 different groups divided on the basis of years of schooling: 0 to 8 years (1), 9 to 12
years (2), 13 to 16 years (3), 17 to 18 years (4), and 19 years of schooling and above (5). These
groupings are based on the following categories: No education/Primary and secondary, higher
secondary, undergraduate, post-graduate, and doctorate level.
Table 1b – CORRUPTION * EDUCATIONAL GROUP Crosstabulation
% within EDUCATIONAL GROUP
EDUCATIONAL GROUP Total
1.00 2.00 3.00 4.00 5.00
CORRUPTION 0 100.0% 30.8% 60.2% 68.0% 77.8% 62.4%
1 69.2% 39.8% 32.0% 22.2% 37.6%
Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Income * Corruption
We created three different groups: 1 to 1500 (1), 1501 to 10000 (2), and 10001 and above. Group (1)
is considered as a lower income group, (2) is a middle income group whereas (3) is a higher income
group. Corruption is defined as those respondents who expressed their willingness to give or take a
bribe.
43
Table 1c - CORRUPTION * SOCIO-ECONOMIC STATUS Crosstabulation
% within SES
SES Total
1.00 2.00 3.00
CORRUPTION 0 72.2% 63.5% 56.3% 62.4%
1 27.8% 36.5% 43.8% 37.6%
Total 100.0% 100.0% 100.0% 100.0%
Age Group * Socioeconomic Status * Corruption
Table 1d - CORRUPTION * AGEGROUP * SES Crosstabulation
% within AGEGROUP
SES AGEGROUP Total
1.00 2.00 3.00 4.00 5.00
1.00 CORRUPTION
0 100.0% 60.0% 75.0% 100.0% 72.2%
1 40.0% 25.0% 27.8%
Total 100.0% 100.0% 100.0% 100.0% 100.0%
2.00 CORRUPTION
0 61.1% 62.1% 70.0% 64.3% 75.0% 63.5%
1 38.9% 37.9% 30.0% 35.7% 25.0% 36.5%
Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
3.00 CORRUPTION
0 100.0% 52.9% 60.0% 40.0% 56.3%
1 47.1% 40.0% 60.0% 43.8%
Total 100.0% 100.0% 100.0% 100.0% 100.0%
Total CORRUPTION
0 72.0% 58.8% 68.4% 60.0% 75.0% 62.4%
1 28.0% 41.2% 31.6% 40.0% 25.0% 37.6%
Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
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