In Corruption, norms and legal enforcement: Evidence from diplomatic parking tickets, Fisman and Miguel use an interesting example to dissect two of the primary causes of corruption mentioned in the literature. To this end, they examine the behavior of UN diplomats stationed in New York City in regards to parking violations. Unpaid diplomatic parking violations are cited as examples of corruption as they involve the use of a public office for private gain. It is hypothesized and then subsequently buttressed with empirical evidence that diplomats from countries with increased corruption will engage in a greater number of unpaid parking violations due to lingering social norms of corruption. Fisman and Miguel find a strong positive correlation between this diplomat parking violation measure and other country corruption measures. Their natural experiment provides insight into the relationship between legal enforcement and corruption as well. When the New York City government began stripping those with greater than three unpaid parking violations of their official diplomatic license plates, violations dropped by 98%. They conclude that legal enforcement clearly has a greater impact on corrupt behavior than social norms.
The paper contains some fairly sound argument and empirical analysis. The natural experiment aspect is particularly valuable because it eliminates the problem of reverse causality. The diplomats were exposed to social norms of corruption prior to committing the unpaid parking violations, and similarly the legal enforcement occurred prior the 98% drop in violations, so in either case there is no possibility of the latter causing the former. This facet strengthens the paper as an examination of the causes of corruption. In the case of the argument regarding legal enforcement, there is little concern of an omitted variable bias as well. It is highly unlikely that anything else besides the fairly hefty legal consequence of losing an official diplomatic license plate could have led to such a dramatic drop in unpaid parking violations. Consequently, the paper provides convincing evidence that stricter legal enforcement can reduce corruption.
The evidence regarding social norms, however, is not as strong. The argument that the corrupt behavior displayed by the diplomats through the parking violations is a reflection of social and cultural norms of corruption is problematic as there is definitely an omitted variable bias here. It should be noted that the authors do control for some of these variables in their regressions such as log per capita income, region fixed effects, average government wage relative to per capita income and number of vehicles registered to each mission. A key omitted variable that could explain the correlation between diplomatic parking violations and survey-based measures of country corruption is weak property rights. If a country has weak property rights, then it is easier and more likely for public office to be used for private gain, the definition of corruption according to the paper. Hence, countries with weaker property rights would have higher survey-based measures of corruption. Moreover, the diplomats from this country would be more likely to commit unpaid parking violations because they may have less of a regard for the rules governing parking spaces owned by private businesses or city governments. Consequently, a lingering culture of weak property rights or weak institutions could be at play here rather than social and cultural norms of corruption. The paper’s arguments regarding social norms of corruption could be strengthened if a measure of property rights across countries was controlled for to further isolate the causal relationship between social norms of corruption and diplomatic parking violations.
An evaluation of the broader policy implications of this paper is equally interesting. Clearly, the findings of this natural experiment suggest that corrupt behavior can be significantly reduced with stronger legal enforcement. Also, as unpaid parking violations decreased so dramatically across all countries after the legal enforcement, there is the hopeful implication that social and cultural norms of corruption can be overcome at least to a certain extent through strong legal enforcement. However, these implications should be qualified with the acknowledgment that parking violations are a fairly minor form of corruption and that revocation of a diplomatic license plate is a fairly major punishment. Consequently, the findings of this paper imply strict punishment for minor corruption as an effective approach. This natural experiment has strong internal validity, particularly when it comes to conclusions regarding the effect of stronger legal enforcement on reducing corruption as both reverse causality and omitted variables are mostly accounted for. Its external validity, however, is not as strong. The situation examined is very specific and narrow and its generalizability is questionable. The same can be said for unpaid diplomatic violations as a measure of corruption. This measure is useful in that it is quantitative, specific, easy to track and based on a natural experiment rather than a survey, but its generalizability as a measure of the level of corruption in an entire country is somewhat weak. These shortcomings aside, the paper contributes to the literature a unique, interesting and empirically sound analysis of some of the primary causes of corruption.