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The Marginal Disutility from Corruption in Social Programs: Evidence from Program Administrators and Beneficiaries

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  • Arya Gaduh
  • Rema Hanna
  • Benjamin A. Olken

Abstract

Concerns about fraud in welfare programs are common arguments worldwide against such programs. We conducted a survey experiment with over 28,000 welfare program administrators and over 19,000 beneficiaries in Indonesia to elicit the "marginal disutility from corruption"—the trade-off between more generous social assistance and losses due to corruption. Merely mentioning corruption reduced perceived program success, equivalent to distributing more than 26 percentage points less aid. However, respondents were not sensitive to the amount of corruption—respondents were willing to trade off $2 of additional losses for an additional $1 distributed to beneficiaries. Program administrators and beneficiaries had similar assessments.

Suggested Citation

  • Arya Gaduh & Rema Hanna & Benjamin A. Olken, 2024. "The Marginal Disutility from Corruption in Social Programs: Evidence from Program Administrators and Beneficiaries," American Economic Review: Insights, American Economic Association, vol. 6(1), pages 105-119, March.
    • Handle: RePEc:aea:aerins:v:6:y:2024:i:1:p:105-19
    DOI: 10.1257/aeri.20230008
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    More about this item

    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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