Khemani: Political norms

1. S T U T I K H E M A N I
D E V E L O P M E N T R E S E A R C H G R O U P
T H E W O R L D B A N K
N O V E M B E R 2 9 , 2 0 1 9
Political Norms:
What do we know about what it is, why it matters for
reforms, and what more do we need to know

2. What are political norms?
 Consider Alesina-Drazen’s 1991 AER paper, Why are
Stabilizations Delayed?
 Immediate stabilization brings social gains over delays
 But delays enable bargaining between rival political groups over the
distribution of costs of reform
 Parameter α: interpreted as “political cohesion” in a society
 If 𝛼 =
1
2
, stabilization happens immediately
 Political norms are beliefs and expectations in a society
about how others are playing the game of politics
 which shape parameters that play the role of α, across a variety of
models of political constraints to reform

3. What are political norms?
The “political game”:
Strategic interaction between “principals” and “agents” in the business of
government
Citizens
Political
Leaders
Political
Leaders
Bureaucratic
Leaders
Bureaucratic
Leaders
Frontline
Staff
Citizen
engage
ment
Principal
Agent

4. Insights from “standard” principal-agent models
1. Incentives of political leaders matter
 Eg: Corruption is lower, and service delivery performance is better
when leaders face re-election incentives (Ferraz and Finan, 2011;
deJanvry et al, 2012)
 Eg: Health outcomes are better when more voters are effectively
enfranchised (Fujiwara, 2015; Khemani, 2015; Miller, 2008)
2. Selection
 Eg: Poverty is lower when leaders are selected from among social
groups that have historically experienced greater poverty and economic
discrimination (Chin and Prakash, 2011)

5. Insights from “strategic” principal-agent models
1. Noncooperative game among multiple principals with conflicting
interests (Dixit, 1996; 2003)
 Eg: Persistent and systemic corruption can be understood as a
Prisoner’s Dilemma in a game theoretic framework (Dixit, 2018)
2. Beliefs among players about how others are behaving
 Eg: Corrupt leaders are not punished because voters believe others
are not going to punish corruption (Bidner and Francois, 2013)

6. Insights from “strategic” principal-agent models
3. Role for professional norms, peer pressure
 Alesina-Tabellini (2004) allude to it; Kandel-Lazear (1992) model a
peer-pressure function; Evidence consistent with peer pressure in
Mas-Moretti (2009)
4. Preference formation over “public goods” or public policies
 Eg: Motivated reasoning (Kahan et al), which makes people resistant
to persuasion through pure information

7. Insights from “strategic” principal-agent models
5. Notion of legitimacy
 Akerlof (2015) provides a simple model of how leaders can choose to
bolster their legitimacy to win compliance with their decisions, but
does not model where legitimacy comes from

8. Example from India
 Simple survey question: should the government provide electricity for
free?
 Posed to different types of respondents in India’s poorest state, Bihar
 Among rural household respondents:
 25% say no
 34% say yes, with a qualification--only for poor people
 41% say an unqualified yes
 Compare to responses of politicians and urban elite (doctors) in our
sample…

9. How office-holding/elite respondents compare to “ordinary”
people in saying electricity should NOT be free:

10. Example from India (cont.)
 What this example shows:
 Demand for price subsidies need not be because people lack
information or are cognitively constrained—rural poor more likely
than urban, educated elite to say “no” to free electricity
 Higher-tier political leaders may lack legitimacy to pursue price
reforms—people may suspect their motives
 Fruitful direction for more policy-research collaboration: can local
political leaders help solve the problems of legitimacy/trust?
 Research design involves partnership with policy-makers to try-out a
local institutional experiment

11. Insights from “strategic” principal-agent models
6. Interaction between political and bureaucratic agents
 Eg: Local government jurisdictions make and implement policies in
complex teams with two types of agents—locally elected and
technically appointed—who are supposed to work together

12. HOW POLITICAL SELECTION MATTERS FOR BUREAUCRATIC PRODUCTIVITY
Correlates of
Public Health
Service
Delivery by
Districts in
Uganda

13. Measuring “integrity”
 To what extent do you agree/disagree with the following statements:
1. It is okay to spread rumors to defend those you care about
2. It is okay to take others’ belongings just for some time without their
permission
3. Exaggerating one’s own qualities is no big deal
4. If a junior does something wrong under his/her senior’s pressure, it’s
not their fault
5. If someone does something wrong under pressure from their friends,
it’s not their fault
6. Passing off someone else’s work as your own, and getting praise for
it, is no big deal
7. Some people have to be dealt with roughly
8. Some people only deserve rude behavior

14. Measuring “public service motivation”
 To what extent do you agree/disagree with the following statements:
1. To make a difference to society means more to me than personal
achievement
2. I am one of those individuals who are good at helping solve
problems/conflict between other people
3. Doing well financially is definitely more important to me than public
service
4. I think there are many public causes which are worth fighting for
5. I am willing to use every bit of my energy to make society better
6. I am not afraid to defend the rights of others even if I am threatened
7. For me, “politics” is a dirty word
8. I do not think that government can do much to make society fair

15. Village politicians in Bihar have higher measures of “public
service motivation” compared to other village respondents

16. In villages where politicians report higher public service
motivation, women report greater access to health services
Correlates of
women
receiving
services from
village public
health workers

17. We know too little about the role of professional bureaucracies
Interdependency across the three principal-agent relationships
--Do strong bureaucracies control the damage of transitory populist
waves in politics?
--Do weak bureaucracies constrain leaders from pursuing reforms?
Citizens
Political
Leaders
Political
Leaders
Bureaucratic
Leaders
Bureaucratic
Leaders
Frontline
Staff
Citizen
engage
ment
Principal
Agent

18. In theory, we are supposed to know some things
How should bureaucracies assign tasks and manage personnel to deliver
public goods?
1. Reduced role for high-powered incentives; greater role for selecting
intrinsically motivated agents
2. Role for autonomy, professional norms and peer-to-peer monitoring
Citizens
Political
Leaders
Political
Leaders
Bureaucratic
Leaders
Bureaucratic
Leaders
Frontline
Staff
Citizen
engage
ment
Principal
Agent

19. But practice deviates from theory
While bureaucracies do tend to have flat wages and job security, public
personnel tend to be subject to rigid rules, and to be distrusted
Citizens
Political
Leaders
Political
Leaders
Bureaucratic
Leaders
Bureaucratic
Leaders
Frontline
Staff
Citizen
engage
ment
Principal
Agent

20. Concluding Thoughts 1
 Reform needs are deep
 “Clever” fixes, such as direct transfers deposited into beneficiary
accounts, to win political support for subsidy repeal, are not enough
 New generation reforms: strengthening state capacity to support
competitive markets, address market failures, and provide public
goods for fairness/justice, and to prevent backlash against market
 In business of international development, counting incremental
policy changes as “reforms”, can create perverse incentives to evade
real reforms
 Separating out anti-corruption may not make sense—overall problem
of state capacity

21. Concluding Thoughts 2
 Challenge of reforming political/state institutions shared
between rich and poor countries
 Not only does mimicking rich country institutions not work, rich
countries too are struggling with the problem
 Large knowledge gaps in understanding principal-agent problems of
government agencies across different contexts
 Not at all clear that well-organized programmatic political parties
solves the problem—why is it not analogous to oligopolistic
competition in economic markets?

22. Concluding Thoughts 3
 The solution area of transparency, information,
communication is not as simple as teaching people that
they don’t understand something
 Problem is a deeper one of strategic interactions studied in game
theory
 Communication and reputation building has a role in moving from a
low-payoffs, or zero-sum equilibrium, to a higher-payoffs, positive-
sum one
 Communication strategies have to interact with political and
bureaucratic institutions

23. Concluding Thoughts 4
 False distinction between economics and politics
 When it comes to addressing problems of “public goods”, as a
benevolent social planner in economics would want to, political
markets reveal information about whether public policies are
performing well
 Economic tools of principal-agent theory needed to understand the
functioning of political markets and government agencies

24. Rich agenda for policy-research collaboration
 Policy experiments with the design of government institutions
 Communication campaigns targeted at strengthening trust in
government institutions
 Gathering data and evaluating impact around these experiments
Citizens
Political
Leaders
Political
Leaders
Bureaucratic
Leaders
Bureaucratic
Leaders
Frontline
Staff
Citizen
engage
ment
Principal
Agent

25. Extra slides

26. Importance of Political Norms
 Little evidence that some types of formal political
institutions are systematically better than others

27. On the one hand: Acemoglu et al argue that democracy is
good for growth

28. On the other: Besley and Kudamatsu show that some autocracies
outperform democracies

29. Importance of Political Norms
 Little evidence that some types of formal political
institutions are systematically better than others
 Significant variation across places that share the
same formal political institutions

30. Eg: While vote-buying
is associated with worse health outcomes…
(Khemani, 2015)

31. Vote Buying Negatively Associated with Service Delivery in
Afrobarometer Round 5 Countries
Dependent Variable
Percent of
respondents
reporting having
experienced vote
buying
No problems reported in
Public Schools
No problems reported in
Public Health Clinics
Ghana 7.00%
-0.177*** -0.164***
-0.0423 -0.0385
Kenya 33.40%
-0.0418** -0.0722***
-0.0177 -0.0126
Mozambique 5.90%
-0.136*** -0.0761***
-0.0261 -0.0275
Nigeria 20.30%
-0.116*** -0.109***
-0.0295 -0.0252
South Africa 4.60%
-0.335*** -0.125***
-0.0447 -0.0391
Uganda 41.40%
-0.0470*** -0.0407***
-0.0125 -0.0101
Vote buying (all
Afrobarometer countries)
-0.0747*** -0.0614***
-0.00571 -0.00475

32. …Effective enfranchisement of poor citizens
leads to better health outcomes
(Fujiwara, 2015)

33. Importance of Political Norms
 Little evidence that some types of formal political
institutions are systematically better than others
 Significant variation across places that share the
same formal political institutions
 Concern with “populism” in liberal democracies of
rich countries
 Research examining variation in “civic” and “uncivic”
voting within a European country (Nannicini et al,
2013)