Private virtues, public vices: social norms and corruption

Corruption has traditionally been associated with an absence of pro-social norms such as trust and altruism. This paper challenges this view by examining market corruption – one-shot exchange transactions between strangers in the shadow of the law. The paper aims to propose that in the absence of repeat interactions and legal remedies to prevent contractual violations, acts of market corruption will require strong norms of generalized trust and altruism. As such, pro-social norms facilitate, rather than mitigate, market corruption.

The paper utilizes meta-analysis to examine the relationship between pro-social behavior in economic experiments and prevailing corruption levels.

The results from meta-analyses of both trust- and dictator game experiments show positive, significant relationships between pro-social norms and prevailing corruption levels.

The findings of the paper suggest the need for further research into the relationship between societal norms and different types of corruption.

Policymakers should be wary about attempting to combat corruption through bottom-up policies designed to strengthen pro-social norms. Such policies may be counter-productive in that they are likely to provide the breeding ground for more acts of market corruption.

Conventional wisdom suggests a negative association between pro-social norms and corruption levels. The paper proposes that the relationship is not that simple. Indeed, the meta-study findings suggest the reverse relationship in the case of petty (market) corruption.