Behavioral science has provided us with impressive evidence on people being trustworthy, willing to trust others, guided by an intrinsic motivation and responsive to communication. We can utilize this contribution of behavioral science for preventing corruption.
In a recent paper entitled “Preventing Corruption by Promoting Trust – Insights from Behavioral Science,” I explain this with the help of six examples:
- First, the “four-eyes principle” builds on the idea that people in teams of two monitor each other. But this mutual control goes along with a collateral consequence, often labelled “the hidden costs of control.” The principle creates an atmosphere of distrust that reduces the self-esteem that people get from contributing to the public good and working with individual responsibility.
- Second, another standard approach to preventing corruption is to limit official discretion. Procurement, officials, for example, are often required to base their decisions only on objective and predetermined criteria. This is supposed to make it harder for corrupt officials to manipulate the procurement process. But this approach also means that honest procurement officers cannot use their experience for selecting high-quality and uncorrupt suppliers.
- Third, elimination of official discretion has counterproductive effects in development aid. Development workers are nowadays required to select partners using formal, verifiable systems that hinder corruption. They can no longer cooperate with local partners, whose systems and capacity in anti-corruption they are supposed to help develop.
- Fourth, many organizations have policies that require employees to sign “compliance statements.” Behavioral science is full of examples on how such small moral reminders can have a substantial impact on behavior. Unfortunately, many compliance statements tend to be complex and lengthy, and are signed long after decisions have already been made — contrary to insights from behavioral science.
- Fifth, law enforcement (such as the UK Bribery Act or the U.S. prosecutorial policy) may be more lenient to firms whose employees paid bribes if the companies can provide evidence of “adequate procedures“ or an effective compliance program (allegedly demonstrated by signed compliance statements, expenses for ethics training, and the like). This, in turn, gives corporate leadership perverse incentives to act in a hypocritical way. These incentives undermine employees’ individual responsibility for ethical conduct.
- Sixth, widespread evidence shows that the so-called “tone at the top” has a profound impact on behavior, more important than the “adequate procedures.” People react to praise and criticism by corporate leaders and their business partners. Our problem is that the tone at the top is not objectively measurable. Its existence cannot be verified solidly by outside observers. Preventing corruption with a focus only on objective criteria will not pay attention to this most important aspect.
These six examples relate to preventive methods that are built on distrust towards officials and employees. These are seen as potentially corrupt actors, who must be rigorously controlled. Behavioral science points to the hidden costs of such methods. It provides us with impressive evidence that in most circumstances people are trustworthy and willing to take individual responsibility. Rather than adding more and more controls, we should allow people to use their discretionary power for preventing corruption.
Prof. Dr. Johann Graf Lambsdorff, pictured above, holds a professorship in economic theory at the University of Passau, Germany, since 2003. In 1995, he designed the Corruption Perceptions Index on behalf of Transparency International and oversaw its realization until 2008. He is globally recognized for his work on measuring corruption and the institutional and behavioral economics of reform. He can be contacted here.