Nick York and Miguel Valadez Laric

1
Impact Assessment Case Study Monitoring
Corruption in Indonesia

• Nick York and Miguel Valadez Laric
• Economist, Evaluation Department
• 15th November 2006

1 Palace Street, London SW1E 5HE Abercrombie
House, Eaglesham Road, East Kilbride, Glasgow G75
8EA
2
Issues

• Limited Empirical Evidence on Mitigating
  Corruption though Monitoring
• 2 Empirical Questions
• Effectiveness of Top Down Approach (Becker and
  Stigler 1974)
• Effectiveness of Grassroots Monitoring
• (poor peoples interests vs local elites)

1 Palace Street, London SW1E 5HE Abercrombie
House, Eaglesham Road, East Kilbride, Glasgow G75
8EA
3
Background

• Study Conducted 2003-2004 by Harvard Researcher
  Ben Olken
• Funded by DFID/World Bank Strategic Poverty Trust
  Fund.
• Subject Kecamatan Development Project, Village
  infrastructure.
• Focus East and Central Java
• www.nber.org/bolken

1 Palace Street, London SW1E 5HE Abercrombie
House, Eaglesham Road, East Kilbride, Glasgow G75
8EA
4
Method

• Data sample 608 villages
• Roads about to be built.
• Randomly assign audits to villages and inform ex
  ante (clustering due to spillovers)
• Randomly assign accountability meetings
• Independent randomization of two alternatives
  plus control villages- some overlap.

1 Palace Street, London SW1E 5HE Abercrombie
House, Eaglesham Road, East Kilbride, Glasgow G75
8EA
5
Measuring Corruption

• Independently estimate actual expenditures of
  building roads
• Incorporate measures of quality
• Compare reported with actual estimated
  expenditures isolate missing expenditures
• Compare missing expenditures control and
  treatment to unpack impact of each type of
  monitoring.

1 Palace Street, London SW1E 5HE Abercrombie
House, Eaglesham Road, East Kilbride, Glasgow G75
8EA
6
Results Top Down Audits

• Corruption found in missing materials and labour
  expenditure not misreported goods prices.
• Audits reduced corruption by 8 on average
• Benefits are 150 of cost of audit
• Threat of Audit enough for effect not due to
  audit corrective measures

1 Palace Street, London SW1E 5HE Abercrombie
House, Eaglesham Road, East Kilbride, Glasgow G75
8EA
7
Results Grassroots Monitoring

• Accountability Meeting attendance raised by 40.
• Substantial Reductions in missing labour
  expenditures 9 18 .
• Small, non-significant reduction in missing
  materials expenditure.
• Since bulk of cost is in materials overall effect
  is negligible.
• Hypotheses information, incentives, public good?

1 Palace Street, London SW1E 5HE Abercrombie
House, Eaglesham Road, East Kilbride, Glasgow G75
8EA
8
Impact Evaluation Case Study Monitoring
Corruption in Indonesia

• Nick York and Miguel Valadez Laric
• Economist, Evaluation Department
• 15th November 2006

1 Palace Street, London SW1E 5HE Abercrombie
House, Eaglesham Road, East Kilbride, Glasgow G75
8EA