Elections and Embezzlement

Abstract: Democratic elections and transparency are believed to contribute to better governance by increasing citizens' ability to hold public decision makers accountable. However, elections and transparency could affect governance outcomes also through other mechanisms: By influencing the motives of the decision makers, by changing the norms and expectations by which citizens evaluate them, and by shaping citizens' willingness to enforce such norms. Through an experimental study with 472 groups of citizens in Burkina Faso, this paper tests whether elections can reduce the embezzlement of public resources, even if citizens' ability to sanction public decision makers remains unchanged. I find evidence that elections facilitate the selection of public-spirited decision makers and lower citizens' tolerance for embezzlement. However, elections also bias citizens' expectations, causing them to underestimate rent extraction and to trust decision makers more than they should. Transparency might enhance the effect of elections by eliminating such perceptive biases.