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Comments on "Is Corruption Good for your Health?"

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Comments by Ina Ganguli on paper "Is Corruption Good for your Health?" presented by Guilherme Lichand at the SITE Corruption Conference, 31 August 2015.

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Comments on "Is Corruption Good for your Health?"

  1. 1. Comments on: “Is Corruption Good for your Health?” by Lichand, Lopes and Medeiros Ina Ganguli (SITE & UMass Amherst) SITE Conference “Fighting Corruption in Developing and Transition Countries” September 1, 2015 Ganguli comments Corruption and Health Sept 1, 2015 1 / 10
  2. 2. “Every dollar that a corrupt official or a corrupt business person puts in their pocket is a dollar stolen from a pregnant woman who needs health care; or from a girl or a boy who deserves an education; or from communities that need water, roads, and schools.” - Jim Kim, World Bank President Ganguli comments Corruption and Health Sept 1, 2015 2 / 10
  3. 3. Paper Overview Research question What is the impact of monitoring mechanisms (audit program) on corruption? (theft of public resources) How does it affect health outcomes? Setting: Brazilian anticorruption program Program launched in 2003 - fed gov’t randomly selected municipal gov’ts to be audited for use of federal funds Once municipality is chosen: Controladoria Geral da Uniao (CGU) gathers info on all federal funds transferred to the municipal gov’t from 2001 and on (retrospective) 10-15 auditors sent to municipality to examine accounts and documents, meet local communities After 1 week report is submitted to CGU and then made public (internet, media) Ganguli comments Corruption and Health Sept 1, 2015 3 / 10
  4. 4. “Mayors divert funds, intended for education and health projects, toward the purchase of cars, fuel, apartments, or payment of their friends salaries... in Paranhos, Mato Grosso do Sul, $69,838 was paid to implement a rural electrification project..one of the farms benefitting from the project was owned by the mayor.” (Ferraz & Finnan 2011) Ganguli comments Corruption and Health Sept 1, 2015 4 / 10
  5. 5. Overview, cont’d Empirical Approach Dataset of audit program reports for health transfers to municipalities Irregularities are coded as corruption (e.g. irregular receipts) or mismanagement (e.g. diversion of resources for other goals) Also coded as high or low procurement intensity if certain terms in description (e.g. acquisition) Linked to health indicators at muncipal (program) level Difference-in-Difference (DD) based on incidence of procurement For the same municipality, compare corruption before and after program for high-procurement intensity vs. low-procurement intensity transfers Corruption should be more prevalent for high-procurement intensity transfers and so treatment intensity is higher Ganguli comments Corruption and Health Sept 1, 2015 5 / 10
  6. 6. Key Findings: Corruption is good for our health Decrease in corruption of 17 percentage points Health outcomes decreased by 0.3 to 0.5 std deviations Decrease in corruption led to increase in mismanagement Less spending, particularly for infrastructure/stock problems and discretion-intensive transfers Ganguli comments Corruption and Health Sept 1, 2015 6 / 10
  7. 7. Comments I: Understanding the DD? Paper begins describing that municipalities were randomly selected to be audited - walk through the endogeneity concerns and assumptions/reason for DD Can relate to work on the setting that leverage other variation, such as reelection incentives of mayors (Ferraz & Finan 2008, 2011) High vs. low procurement intensity - binary based on 50% of actions for program coded; sensitivity to this discussed but more info, reasoning for choice of terms. DD assumption of no unobserved time-varying differences between groups Retrospective data - might there be differential availability of data going back for high vs. low procurement intensity? Paper trails (related to Pomeranz, 2015)? Are low- and high-procurement intensity transfers are treated equally by auditors? Might auditors have different pressures to report on low vs. high intensity transfers? Ganguli comments Corruption and Health Sept 1, 2015 7 / 10
  8. 8. Comments II: Defining corruption Main DV is share of investigations coded as corrupt (based on terms) Possible to use other measures? E.g. Ferraz & Finnan (2011) define corruption primarily as “the total amount of resources related to corrupt activities, expressed as a share of the total amount of resources audited” Sensitivity to choice of terms for Corruption vs. Mismanagement? (e.g. resource diversion?) Ganguli comments Corruption and Health Sept 1, 2015 8 / 10
  9. 9. Comments III: Is it really bad for everyone’s health? Since comparison is for high vs. low procurement intensity programs, focus on indicators linked to specific programs “Whenever the same indicator applied to multiple transfers, we excluded that variable in the analysis” This leads to a small set of health outcomes (hospital beds, immunization, water & santiation coverage) - which are excluded and possible to gather other health measures? Does this differentially impact certain part of the population (poor)? Ganguli comments Corruption and Health Sept 1, 2015 9 / 10
  10. 10. Comments IV: Why and what happens next? Striking that findings are different for education (e.g. Reinikka and Svensson, 2005) - possible to compare to transfers for education? “Due to budget constraints, the random audits program has been recently downscaled.... From 5,000 investigations per year in 2010, it down to 2,000 in 2011 and 1,000 in 2013”; focus now on capitals and large transfers Is this what analysis would suggest? New focal point? Ganguli comments Corruption and Health Sept 1, 2015 10 / 10

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