Causes of corruption in case of politicians,
Economic, social, psychological and institutional reasons
készítette: Zádor Zsófia
Transparency International: Korrupció és átláthatóság c. kurzus
Abstract
This study’s objective was to determine why politicians become corrupt according to economic, social, psychological and institutional reasons. The method was to collect results of surveys and identify the causes based on them. Results indicate that politicians become corrupt because above the general risks that concerns everyone, they enter into an already existing strongly cooperative and closed circle, which protects itself from outside risks of apprehension as well as often their personalities collide with those masculine characteristics that are the preconditions of becoming corrupt. This study’s conclusions indicate that politicians have smaller chance of being convicted as well as lager utilities can be gained through small efforts. Further studies could be done on the question whether there is a direct relationship between the ratio of men and women in the parliament and the level of corruption among politicians.
Table of contents
Causes of corruption in case of politicians,
Abstract
Introduction
Economic approach to corruption
General approach to crimes
Money, utility and luxury as driving forces
The economic approach to psychology concerning ethics and fraud
Social and psychological approach to corruption
Corruption as a general challenge
Corruption as an individual’s decision
Cultural approach
Corruption in politics and political institutions
Organizational structure of political corruption
Fraud reports to Nations
Conclusion
Summing up
References
Introduction
In Hungary society feels that the government is among the most corrupt institutions and as generally they are unable to examine their work in depth the trust between the people and the government declines. But is it at all true that politicians are corrupt? And what could be the reasons why we feel that they are so corrupt. The question is of relevant importance as Hungary is lagging behind European standards in preventing and convicting offenses in corruption.
So in this essay I will be dealing with what the economic, social, psychological and institutional reasons are for politicians to become corrupt? I will be examining all these factors both in an individual and a general approach as there might be several factors that challenge everyone but only those with the special characteristics will act upon them. My scope is politicians generally but with a focus on Hungary, as I know most about the situation in this country as well as many of my sources concern it. There are more and easier opportunities for politicians to gain large amounts of money through corrupt activities because their personalities are more compatible with this kind of behavior as well as it would be more difficult to stay out of the closed, corrupt circles of the bureaucracies. I will use existing data from reports in order to prove my assumptions concerning the reasons why politicians become corrupt.
First of all I will discuss the economic approach to criminal behavior, with great relevance to Becker’s theory and focus it on political corruption, and then the psychological driving forces will be examined from an economic point of view. Social and psychological reasons for corruption will be discussed first as a general challenge and secondly as individual characteristics. Cultural approach is also of great importance so I will be dealing with it in length and finally the political structure of institutions and the ACFE’s Fraud Report to the nations will be used to conclude my hypothesis on the reasons for political corruption.
Economic approach to corruption
Corruption and crime are both activities widely discussed in the economic field, mainly in the economics of psychology and in the analysis of human behavior. As the basis of economy lies in the belief that human beings are rational and make decisions rationally we can analyze corruptive activity in the form of economics. First I will be discussing a general approach to why humans commit crime from an economic point of view based on Gary S. Becker’s findings. Then I will be looking at the different driving forces behind corruption and finally the economics of psychology behind ethics and fraud will be examined. As the main topic of my essay focuses on political corruption at the end of the sections I will further touch upon the conclusions on this aspect.
General approach to crimes
Although this paragraph will concern crimes in general, similar patterns and properties can be distinguished when looking at different type of offenses, which can be projected to corruption. There are four major types of properties that a offender analysis prior to committing a crime. Gary S. Becker came up with the model of offensive activities. I will use his model to explain what the most important speculations are before deciding to engage in offensive activities. Although Becker’s most important question is how to determine the amount and type of punishment in order to find the equilibrium I will not be considering this issue.
The first and foremost concern that rises in a prospective offender’s head is whether the crime will harm other members of the society. Criminals tend to outlaw their incentives if realizing how many people might be harmed due to their activities. Becker outlines this relation as , where Hi is the harm from the ith activity and Oi is the activity level. (Becker, 1976) This is the reason why shopliftings are more common than homicides. Although these are extreme cases, we can see the correlation with corruption. Corrupt politicians believe that their activities will not harm society as a whole. It is true that the money they can utilize are most of the time public capitals but the train of thought that goes through one’s mind is if only they privatize a minor part of that money no one will be harmed especially not physically or even notice the missing amount. On the other hand Becker states that ‘offenders receive diminishing marginal gains and cause increasing marginal harm from additional offenses’ (Becker, 1976, p 43) This collides with what I believe to be true in case of politicians, when committing the fraud for the first time politicians have great concerns as they are afraid to lose their social privileges and of public humiliations but as more offenses are committed without conviction they will get more eager to acquire more wealth.
Secondly the cost of apprehension and conviction is taken into account, as it is linked to the probability of being caught and the third property; supply of offenses. Becker points out that there is a positive correlation between the amount that is spent of prevention; such as police and equipment and the probability of being convicted. From this eradicates that if the probability of discovering the offense increases it would decrease the probability of criminal acts. Furthermore the probability of conviction has a greater effect on offenders than the increase in the punishment. That is and where O is the number of offenses, pi is the probability of conviction and fi is the punishment.(Becker, 1976) In case of politicians this theory is also well functioning, as they are the ones making the laws and are barely inspected by a higher authority the probability of being convicted is law therefore due to the relatively low risk offenses will be more likely committed. Also ‘offense is committed if the utility he could get by using his time and other resources at other activities.’(Becker, 1976, p 48) In case of fraud a deal is already made and by introducing corruption only a small percent of extra effort has to be put into work and the incomes will increase greatly.
Finally punishments are considered, which are the same for different persons but the costs differ in that they have to be compared to their own monetary equivalent or work, which may include the earnings that could be made, the negative effect of the conviction in case of future job etc. (Becker, 1976) I believe this is the factor where politicians have greater risk than less public figures, still the other properties have such a favorable and low risk entity for them that they often disregard the effect of punishments.
Money, utility and luxury as driving forces
In this section I will be exploring the economic approach of psychology with driving forces in the main focus. These forces are most often not individual or group specific properties rather common characteristics. Money is a human specific motivation, the expected utility theory is also a general model and attitudes toward luxury may differ between regions but are not specific to individuals.
It was found that money does not serve as motivation for animals, as experiments were carried out on chimpanzees but is a purely human specific motivation. And not only does money have an effect on those, whose self is not organized around wealth, materialism or luxury but serves as a motivation for everyone. Money exist within the context of the human mind, and with the help of it wealth is able to self reproduction. This is very important as something that is able to self reproduce is considered to be a form of life and thus has a serious effect on the self. (Mérő, 2003) Therefore money is a general, common driving force to all.
Before explaining the expected utility theory we have to establish that rational decisions are made in sociology as well. The individual has their own intentions and therefore the criteria of rationality can be reached, that in order to successfully achieve their individual aims they have to use the most proper instruments. The importance of rational behavior is to choose the most valuable element and to carry out the decision through the possible alternatives. Feminist sociologist argue that this theory concerns only the masculine characteristics; isolation of individualism. (Kovács, 2003) We will see later that this point will be of great importance. Rationality is the precondition of expected utility theory, according to which the expected utility of each alternative has to be determined and when that is done the highest expected utility value has to be chosen. During counting the probability of an event has to be multiplied with the expected utility. This way risk is also considered, which defines the possible losses of choosing a certain option. (Móra, 2003)
Materialism and striving for luxurious products is not a general attitude rather the characteristic of individuals. Luxury has a historical background, in Europe and Asia luxury used to be available for nobility only. This might be one reason why social figures, and high-class personals still strive for the maximum in material means. A more general attitude toward materialism is that according to Prelinger (1959) to our adult self we believe that our possessed object are the 4th closest, therefore they form the extension of the self. The more objects we possess the higher self-esteem we have not to mention that it serves as a comparative bases to our own expectations and others’. Finally they are status symbols, which serve to determine our social position and status as well as determining the quality of life. Therefore having major importance in upholding the status quo, by protecting and making visible the difference among people in different hierarchical situation. So what we can determine is that generally people believe that object they possess determine their selves but people from higher status, for example politicians tend to pay attention to luxury more than everyday people. (F. Lassú and Lisznyai, 2003)
The economic approach to psychology concerning ethics and fraud
In this section I will specifically analyze tax evasion as a specific form of corruption in an economic approach as well as the ethical considerations in economy. I will also extend or just the opposite, narrow my findings to corruption and political fraud.
Tax evasion is the illegal avoidance of paying tax by individuals, firms or trusts and a subpart of corruption. As already stated, one will commit fraud, if the expected utility will exceed the legally gained revenue even if the expected punishment is counted. The lowering of corruption cases depend on the probability of conviction and the amount of punishment. Therefore in order to cut the criminal acts one must improve the effectiveness of efficacy. We can consider the issue from a game theory point of view; where I can decide whether or not to pay taxes. There are four different cases: 1.) Only I am paying 2.) No one is paying 3) Everyone is paying 4.) Only I am not paying. The outcomes are the following:
Everyone elsePaying / Not paying
Individual / Paying / 3 / 1
Not paying / 4 / 2
1. Personal Table - Game theory of tax evasion
The concrete value of the outcomes does not matter only the ranking. The worst possible scenario is that I am paying my taxes but no one else does, therefore I will have less money but no public goods will be provided to me. While the best scenario is if I am not paying while everyone else is. It is clear that I am better off if I am not paying my taxes. But there is a cultural reinforcement or rather the lack of punishment, in Hungary those norms that would advocate cooperation are not working properly. This can be seen through Sík and Tóth survey, where it was stated that ‘Those who want to achieve something, are forced to violate certain rules’. 39% of the population agreed completely and another 39% agreed partially with the statement. This results in the lack of trust as it is clear to everyone that those in leading positions are violating norms. The theory as a whole can be transferred to corruption as well. The game theoretical approach can be perfectly replaced by corruption and as fraud does not physically harm anyone and is believed to be widely used it is not considered a major crime, and is not condemned by society. (Papanek, 2003)
So if we want to take a look at all these economic perspectives from an ethical point of view we immediately find ourselves in a difficult situation. According to the basic rules of economics the maximization of utility is a crucial element. Does that mean that if someone is altruistic and self-sacrificing than they are not maximizing their utilities? Or could it be individual specific what their utilities are? If we are taking into account the ethical considerations in economic decisions then the utility of economic activity is increased as trust results in the decrease of costs. Projected to political corruption maybe the whole concept of politicians placing public interest above maximizing their own utilities is completely wrong. But if we can consider utilities to be individual specific then it poses numerous questions to the theories based on rationality.
Social and psychological approach to corruption
Social sciences handle the issue of corruption with great respect; they analyze it from individual, collectivistic, culture based, genetic, historical and institutional point of view but I will analyze the cultural approach in a different section. From the fact that corruption is studied so widely we might conclude that experts do not really know from which angle to approach the subject. I will separate the problem according to being a general threat that challenges us all and something that derives from the individual’s behavior, motivation and characteristic.
Corruption as a general challenge
According to a research by Adrienn Balogh, that was based on Mária Vásárhegyi’s study, the explanation to what extent is corruption present in the economic and social world can be found in the ethical standards of the leaders of the country, the standard of living and the society’s general ethical standard. (Balogh, 2011) These areas encompass a wide ranging territory therefore we have to face the temptation of offence day by day. Corruption does not have a hereditary, genetic basis. Even if there is some indirect connection between the two, fraud cannot be considered through the biological level of analysis. But many came to the same conclusion that it has an evolutional background. Among many social environments people solve their problems by engaging in advantageous corruptive activities. For example Lévi Strauss found among the South-American societies that leaders used giving and receiving gifts to uphold their power. And as we have already seen game theory also suggests that people generally follow their own interests in case of trade. Corruption can also be defined as a race for the resources of society. As often the corrupting party lacks some kind of resource and their aim is to acquire them through avoiding social norms. (Bereczkei and Tóth, n.d.) Of course there are circumstances that act in accordance with outlawing committing a crime. The most important risk factor is always the threat of discovering the offense, public humiliation and in some cases even psychological discomfort and guilt increases risks. The lower status one has to more financial and psychical burden due to fraud. Corruption is usually not committed alone but rather in groups of people, where a cooperative game is played, with high level of trust and self-sacrifice but with major losses to the society. The problem is that due to the closed groups, the high level of privacy and low level of transparency society cannot detect the macro structures of corruption and no one is able to monitor and point out the unethical and illegal behavior. This final point is of special importance in case of government corruption. They create closed, large groups in which every actor’s interest is taken into account or compensated. But in the development of corruption besides the social effects individual strivings are even more important. (Bereczkei and Tóth, n.d.)