Money versus Kudos : The Impact of Incentivizing Local Politicians in India

Despite growing awareness of the various limitations of electoral democracy, there is arelative lack of evidence on effective policy interventions to improve the performance of elected officials and motivatethem to act more equitably. This paper reports the results from an experiment in which elected presidents of villagegovernments in Tamil Nadu, India, were randomly assigned to one of two incentive schemes (or a control group): afinancial incentive that rewarded better performing presidents with a higher public budget, and a nonfinancialincentive that awarded them a certificate demonstrating their achievement with an information campaign todisseminate it. The findings show that both incentives improved access to public investments and private transfersin the villages of incentivized presidents. The nonfinancial incentive also led to a more equitable between-hamletallocation of resources within the village, and this effect was more acute with officials who faced potentially morecompetitive elections. The paper shows that the results are consistent with a theoretical model where imperfect voterinformation drives inequities in resource allocation, and interventions that provide credible information onpolitician quality motivate elected representatives to act more equitably.