Family Ties and Corruption
-
Anastasia Litina
and
Dimitrios Varvarigos
Abstract
We study the relation between nuclear family ties and corruption. Our theoretical model shows that the population share of people who desire close ties with their families (i.e. the extensive margin) has an ambiguous effect on the level of corruption, due to the presence of conflicting mechanisms. However, the strength of this desire among people who want close family ties (i.e. the intensive margin) has an unambiguously negative effect on corruption. The latter outcome finds support from our empirical analysis: Using micro-level data, we show that, in contrast to conventional wisdom and cross-country reflections, stronger family ties are negatively correlated with a broad set of activities that measure corruption.
1 Introduction
Corruption is a phenomenon whose adverse social and economic effects can be wide-ranging (e.g. Mauro 1995; Tanzi and Davoodi 1998). For this reason, the identification of various factors that fuel corruption has held a prominent place in the research agenda of many fields, including economics. As a result, a large body of work has pinpointed several factors that are responsible for high levels of corruption – factors that include economic, administrative, historical, and cultural ones.[1] Our study contributes to a further understanding of the cultural sources behind corruption, as it aims at examining the role of family ties. Specifically, it focuses on nuclear family ties – rather than extended kinship ties – and aims at investigating, both theoretically and empirically, their impact on people’s willingness to engage in corrupt behaviour and, therefore, the level of corruption.[2]
The results from existing empirical work on the link between corruption and family ties are rather mixed: While the study by Marè, Motroni, and Porcelli (2020) finds that family ties are associated with higher levels of corruption, Ljunge (2015) reports that family ties promote civic virtues – among them, the disapproval of corruption. In general, while the link between family ties and corruption has already attracted the interest of empirically-oriented work, the existing literature lacks a systematic theoretical study that identifies possible mechanisms through which family ties affect people’s attitudes towards corruption. One of our study’s aims is to fill this gap in the literature. It also aims at presenting further empirical evidence on the relation between corruption and nuclear family ties.
Given its focus on nuclear family ties, our theory borrows elements from Alesina et al. (2015), i.e. the agents’ locational preference contingent on their desire to retain close ties with their families. It expands them by incorporating public sector employment, which gives the opportunity of illegal rent-seeking through corruption. Our theoretical model delivers mechanisms that explain why the effect of family ties on corruption can be ambiguous. On the one hand, people’s desire to retain strong family ties reduces the range of high-productivity opportunities to which they can be employed. This is due to their reluctance to reside away from their parents. This outcome tempts them to compensate for this shortfall through the ill-gotten gains of corrupt behaviour. On the other hand, the utility cost that emanates from the chastisement and the stigma attached to the revelation of corrupt behaviour, has a more pronounced effect on people who possess a sense of strong family ties. This acts as a counter-incentive for them to seek illegal rents through corruption. Overall, when the measure of family ties is the population share of those who abide by them, family ties may be associated with either more or less favourable attitudes towards corrupt behaviour. Family ties are therefore associated with either higher or lower incidence of corruption, depending on which of the two opposing mechanisms prevails.
Our theory also offers another perspective that involves the potential measure of the strength of family ties. The argument is that, in addition to the share of people who have a desire to retain close ties with their nuclear families, what is also important is how strong this desire is. In other words, our point of view is that both the extensive and the intensive margins of family ties’ measurement merit consideration. For this reason, besides the prevalence of different family values among the population, our model also pinpoints another measure of family ties – i.e. the component that quantifies the utility accruing as a result of retaining close ties with one’s family. Under this measure, the relation between the strength of family ties and corruption is unambiguously negative. In other words, when the desire to retain close ties with the family increases, the incentive to be corrupt declines.
Our model is quite rich and can yield various testable hypotheses. We choose the result involving the intensive margin to be the focus of our empirically strategy in investigating the interplay between corruption and family ties. In doing so, we focus primarily in highlighting the correlation between corruption and family ties, and in uncovering its underlying mechanisms. We do not attempt to establish causality, a task that is rather demanding with survey data. Methodologically, we test our reduced-form hypothesis using micro-level data from the European Values Study (EVS) and a variable developed by Alesina and Giuliano (2010), as a means of measuring the strength of family ties. Our empirical results support the hypothesis that stronger family ties are associated with attitudes less favourable to corruption. Therefore, they accord with the empirical outcomes in Ljunge (2015) and with broader arguments that stress the importance of familial experiences in determining civic values (e.g. Wilson 1993). Our results are robust to several different specifications, such as controlling for region fixed effects, which capture even more unobservables, and to the use of different samples, e.g. the World Value Survey (WVS) instead of the EVS. We also exploit a feature of our model’s set up, which, in turn, draws from the model of Alesina et al. (2015), i.e. that of people who reside closer to their family versus individuals who move to another region further away from their family. The EVS allows us to exploit this feature, which we use to implicitly measure how intense the desire to retain strong family ties is. Our empirical findings suggest that the negative impact of family ties on corruption is in fact stronger in the case of those who stay close to their families as opposed to those who do not, thus offering further support to our model’s results.[3]
Interpreting our results, we see that there are reasonable arguments to support an outcome whereby family ties reduce the incidence of corruption. Conventional wisdom and casual observation may be at odds with this view. After all, a simple observation of the European continent can reveal that corruption is more widespread among countries in Southern Europe – in which strong family ties are also more pervasive – compared to Northern European countries – in which strong family ties are not as pervasive. How can this observation reconcile with our theoretical and empirical results? To see this, recall that although it is possible that the share of agents with preferences for close family ties – a population measure – is positively related to corruption, the strength of the desire to maintain close family ties is inversely related to corruption. In this respect, our micro-level empirical approach is primarily capturing outcomes that are consistent with the latter mechanism. This is because our main source of variation is across-individual variation, without being necessarily at odds with cross-country reflections on the issue. Indeed, we conduct an individual-level analysis and our results are derived after accounting for a wide range of individual and country controls, such as country and year fixed effects. In other words, we do not ignore other factors – on the contrary, they are an important part of the story and they are implicitly captured by the fixed effects. Our approach, however, is to highlight the micro-level factors and to exploit within country variation. Therefore, our results should be primarily interpreted as follows: If two individuals live in the same country and are thus faced with the same institutional/historical/cultural background of the country, then those who have stronger desire for close family ties will be less favourable towards corruption.
We should note that Enke (2019) has investigated the empirical implications of a broader measure of kinship. However, his study emphasises the fact that “…Alesina and Giuliano’s variable of nuclear family ties is conceptually distinct from anthropologists’ concept of extended kinship ties…” (Enke 2019, p. 974), thus offering credence to our previous assertion. Moreover, the kinship variable in Enke (2019) comprises four different elements, i.e. extended family, joint residence, unilineal descent and clans – all of which are applicable primarily to an ethnic group analysis, hence they differ from the type of family ties modelled and empirically tested in our paper. We view the distinction between the two types of family ties as instrumental since each definition and approach captures different aspects of the topic and thus different mechanisms associated with it.
Overall, our study contributes to two strands of the literature. First, it contributes to the literature that investigates the determinants of corruption. As we stated earlier, this literature is extensive and has identified several economic, institutional, historical and cultural factors (e.g. Barr and Serra 2010; Haque and Sahay 1996; Klitgaard 1988; De Soto 1989; Tanzi 1988; Treisman 2000). Second, it contributes to the literature that investigates the impact of family ties on various economic and social outcomes.[4] This literature has identified the implications of strong family ties for labour market outcomes (Alesina and Giuliano 2010; Alesina et al. 2015); religiosity (Choy 2020); geographical mobility (Alesina and Giuliano 2010; Giuliano 2007); on political development (Gutmann and Voigt 2020); education (Duranton, Rodríguez-Pose, and Sandall 2009); gender roles (Alesina, Giuliano, and Nunn 2013); economic systems and reform (Brumm and Brumm 2017; Esping-Andersen 1999; Galasso and Profeta 2018); trust (Alesina and Giuliano 2011); as well as ideology and political participation (Alesina and Giuliano 2011; Todd 1983).
Our study is structured as follows: In Section 2 we develop a theoretical model to study the underlying mechanisms that link corruption with the strength of family ties. Section 3 presents our empirical analysis and findings, and Section 4 concludes.
2 Theory
The model draws on Alesina et al. (2015) with regard to its focus on nuclear family ties (rather than extended kinship ties) and their aspect of locational preference. We consider an economy that is populated by a constant mass (normalised to 1) of couples. The individuals who comprise a couple are distinguished solely on the basis of occupational characteristics, the details of which will be discussed shortly. Nevertheless, each couple shares the same personality traits and preferences, and make all their decisions jointly. Henceforth, we shall be referring to couples as “agents”.
Agents form their personality traits and adopt values and norms, which will ultimately determine their desire to maintain close ties with their families, in their childhood. In this study, we are not going to be explicit about the process whereby agents adopt these cultural traits. Instead, we shall assume that a fixed fraction
Young couples earn income and enjoy the consumption of (private and public) goods. There are two sources of income for each couple because the activity to which each individual will be engaged, with the purpose of earning income, differs. Particularly, one of them will operate as a perfectly competitive supplier of a privately-produced good; the other will be employed by the public sector (e.g. as a civil servant) contributing to the procurement of a utility-enhancing public good.
Private Production
The producer of the private good will supply Y units of it, meaning that this is also the amount of income that accrues to agents as a result of private production. We follow Alesina et al. (2015) in assuming that the productivity of private sector producers is a function of the location in which agents decide to reside. If agents are willing to move to any location away from their parents’ place of residence, private production will result in
Public Sector
The government distributes an amount of output to each civil servant, with the condition that these funds should be used as an input in the operation of a project that contributes to the procurement of a utility-enhancing public good. In return, civil servants receive a salary B > 0 for their services. Contrary to private sector producers, we assume that the renumeration of individuals who work as civil servants is not affected by the location where agents reside. Although this assumption is made mainly for analytical convenience, it is not alien to empirical evidence. Indeed, the studies by Langbein and Lewis (1998), Ozmucur and Celasun (2001) and Bau and Das (2017) have not found any significant relation between productivity differentials and wages in the public sector. We will also assume that the production of public goods occurs prior to private production.[6]
The government also levies a tax T > 0 from each agent, and uses the proceeds to finance its expenses for public sector salaries and for the provision of public goods. While doing so, the government abides by a balanced budget rule. Using G > 0 to denote the amount devoted to public goods’ provision, and taking into account the unit mass of agents, it follows that the government’s budget is given by T = G + B. We follow others (e.g. Alesina and Rodrik 1994; Barro 1990) in assuming that all public budget variables are tied to the scale of the economy. Specifically, public sector salaries, taxes and spending on public goods are all measured in proportion to the economy’s average productivity y. Formally, it is assumed that
where b, g, τ ∈ (0, 1). Therefore,
Civil servants are corruptible: They may abuse their position and invest only a fraction z ∈ (0, 1) of the funds allocated to them by the government, thus expropriating the remaining fraction 1 − z for their own (and their households’) benefit. Nevertheless, the authorities may detect their malfeasance. If this happens, the civil servant’s penalties involve the loss of his salary, in addition to the loss of his ill-gotten gains. Furthermore, the punishment, stigma and shame associated with the revelation of a civil servant’s misconduct is an impediment to the couple’s life satisfaction. As we shall see shortly, these emotional costs entail a proportional loss in overall utility.
Let us assume that the probability of a Type-j civil servant being apprehended and punished for his transgression, denoted M
j
, is uniformly distributed on
where
If we denote the number of civil servants who will decide to be corrupt by Θ, it follows that the amount of public goods offered by the public sector, denoted a, can be expressed as α = G(1 − Θ + Θ z). Taking account of (1), this expression can be rewritten as
Preferences
Agents make a choice about where to reside and work – a choice that, once made, is irreversible: Agents will spend their adult lifetime in the location they chose originally. As we indicated previously, the decision to reside in the close vicinity of the agents’ parents will entail a productivity cost, manifested in the potential loss of income from private production. The reason why agents may still decide to do so however, relates to their preferences on the issue of family ties. In particular, agents who have a desire for maintaining close family ties will either enjoy a utility gain if they reside in their parents’ location, or incur a utility cost if they move away from it. On the contrary, agents who have not adopted values that are supportive to family ties, do not gain nor lose any utility as a result of their choice of residence when they become adults. Formally, the Type-j agents’ utility is given by
where c j denotes consumption of private goods and
such that φ > 0.[7] Furthermore, note that S captures the proportional loss in utility, due to the chastisement, stigma and shame attached to the revelation of a corrupt civil servant’s wrongdoing. Given this, we assume that
As we can see from (6)–(8), in the event that a corrupted civil servant’s transgression is revealed, he and his partner will face emotional costs that are captured by a proportional loss in utility. Specifically, the revelation and ramifications of his misconduct will impinge on the prospects of enjoying activities such as consumption and – for those with preferences for strong family ties – being close to their parents. For example, legal proceedings, the stigma of being a convicted fraudster and the possible imprisonment can impinge on the number and the quality of interactions with the nuclear family.
A counter-argument could be that interactions with the close family may be less affected by issues such as legal proceedings, imprisonment, reputational damage etc., than interactions with acquaintances and friends, hence living near parents may be an attenuating factor to these costs. Our objective, however, is not to make comparisons in the quality of interactions with the nuclear family versus interactions with other acquaintances. Instead, our focus is on people who have an increased desire to be close to – and to interact with – their parents. As long as the number of such interactions and the circumstances/environment under which these occur are affected by these issues, then they will surely impinge on the utility increment that people with strong family ties enjoy from being close to their parents.
Note that the specification in (6) also assumes that the deleterious effects of stigma and punishment do not impinge on the utility from public goods. From a technical point of view, this assumption eliminates strategic considerations on the incentives to be corrupt among Type-w and Type-s civil servants.[8] Such strategic effects would impose significant mathematical complication, thus obscuring the clarity of our analysis without adding anything to its main implications.
2.1 The Decisions of Type-w Agents
Let us consider agents who do not have a desire to retain close ties with their families (i.e. j = w). Taking account of (6)–(8), it follows that they will choose to move away from their parents’ location, thus earning
where
is the agents’ budget constraint. If the civil servant is corrupt, the agents’ income will be augmented by the amount of ill-gotten gains that emanate from his rent-seeking. In the event that he is detected, however, he will lose all the gains from his employment in the public sector – the salary and the proceeds from illegal rent-seeking – while he and his partner will face the utility-reducing consequences of the revelation of his fraudulent behaviour. Under such circumstances, the Type-w agents’ (expected) utility is:
We can substitute (1) and (2) to express the budget constraints as follows:
Next, we can combine (3), (4), (10), (12) and (13) to rewrite the utility functions in (9) and (11) as
and
respectively.
The Type-w civil servant will be corrupt and engage in illegal rent-seeking as long as the agents’ (expected) utility from doing so is at least equal to the utility that applies if he decides to abscond from any wrongdoing, i.e. if
such that civil servants for whom μ
w
≤
2.2 The Decisions of Type-s Agents
Now, let us consider agents who have a preference for retaining close ties with their family (i.e. j = s). Given the characteristics of the model, these agents may actually have the incentive to stay in the location of their parents, despite the potential loss of income from such a decision. If they do so, the agents’ budget constraint, following the substitution of Eqs. (1) and (2), will be given by
if the civil servant does not engage in the pursuit of ill-gotten gains, or
if he does. In the scenario where Type-s agents move to new locations, their budget constraints will be identical to those of Type-w ones, i.e.
if they stay in their parents’ location, and
if they move away from it.
We follow Alesina et al. (2015) in imposing a condition which guarantees that the agents who have preferences for maintaining family ties will find optimal to reside close to their parents. It should be noted that this assumption accords with evidence showing that strong family ties reduce geographical mobility (Alesina and Giuliano 2010; Giuliano 2007). Formally, a sufficient condition is
Given the condition in (24), agents with a desire for strong family ties will always choose to remain in their parents’ location, meaning that their utility will be given by either (20) or (21).[9] As a result, we can use these expressions to examine the civil servant’s conduct while in public office. In other words, the critical value μ
s
for which
According to (25), civil servants for whom
2.3 The Impact of Family Ties on the Level of Corruption
We can combine (16) and (25) to express the total number of corrupt civil servants as
where
Substitution of (26) in (5) yields
Next, we define the composite term
which allows us to get the following results (all proofs are relegated to Appendix B):
Lemma 1
Suppose that
Lemma 2
Suppose that
We can formalise the implications on the impact of preferences for strong family ties among the population on corruption through.
Proposition 1
The impact of an increase in the population share f ∈ (0, 1) of people with a desire to retain close family ties has an ambiguous (i.e. either negative or positive) effect on the incidence of corruption.
The ambiguity emanates from the fact that, for agents whose values are conducive to strong family ties, the utility costs associated with a civil servant’s misconduct generate two conflicting effects on the incentive to be corrupt. On the one hand, the possible income loss incurred because of their desire to reside close to their parents, while relinquishing more productive opportunities elsewhere, mitigates the loss in the utility of consumption induced by chastisement and stigma. This is a mechanism through which strong family ties cause a higher incidence of corruption.10 An alternative interpretation is that, for agents who abide by strong family ties, the ill-gotten gains of corruption are also viewed as the means of covering the shortfall in productivity and income. On the other hand, the utility costs that stem from the revelation of a civil servant’s wrongdoing, also mitigate the agents’ enjoyment from residing close to their parents. This expected loss in utility acts as a disincentive to engage in nefarious activities while in public office, hence generating a mechanism through which family ties cause a lower incidence of corruption.[11]
Note that, in addition to distribution of different types of family values among the population, our model includes an additional measure of the strength of family ties. This is captured by the parameter φ, i.e. the utility value for agents who enjoy retaining close ties with their families. In other words, this is a measure of how strong is the feeling of family bonding among the people who possess preferences for retaining ties with their nuclear family. In order to investigate its implications on the model’s main outcomes, consider the result in
Lemma 3
Now, we can establish the impact of this measure of family ties on corruption by means of [12]
Proposition 2
The impact of a stronger desire for family ties (i.e. a higher φ) on corruption is unambiguously negative.
The intuition is the following: The higher is φ, the stronger is the expected utility loss for agents who contemplate the ill-gotten gains of corruption, but who also consider the possible repercussions, including the non-pecuniary ones, from the revelation of this wrongdoing. For this reason, the strength of the desire to maintain close ties with the nuclear family alleviates the incentive to engage in corrupt behaviour.
There are some important implications from the preceding analysis. Firstly, our model provides a theoretical foundation for circumstances when – contrary to the conventional wisdom that would view strong family ties as a fillip for corruption – factors that are relevant to strong family ties reduce the incidence of corruption. The second, and equally important implication, has to do with the idea that the measure of family ties can be crucial in determining its impact on corruption. We clarify this point through
Proposition 3
It is possible that a higher population share of people with preferences for retaining family ties increases the willingness to be corrupt, whereas, at the same time, a stronger desire for family ties, among those with preferences for retaining such ties with their families, reduces the willingness to be corrupt.
In other words, the ambiguity with respect to the impact of family ties on corruption is not only related to the conflicting underlying mechanisms, but it may extend to the measure of family ties as well. This is because what matters is not only whether people have a desire to retain close ties with their families, but also how strong this desire is. The next section presents an empirical analysis that uses micro-level data to test the reduced-form hypothesis of a relation between the strength of family ties and the approval of corrupt behaviour.
3 Empirical Analysis
Our empirical analysis focuses on testing outcomes that are more closely related to the underlying message of Proposition 2. Furthermore, the micro-level of our analysis allows us to discuss several other elements of the model as well.
3.1 Individual-Level Data and Empirical Strategy
In this section, we estimate the impact of family ties on corruption-related attitudes at the individual level. We employ the measure employed in Alesina and Giuliano (2010) that captures the strength of nuclear family ties. As already highlighted above, we totally abstract from kinship and in-group interaction considerations. Our measure is actually capturing the degree of love, affection and respect as shaped within families. We thus use data from the European Values Study (EVS). The EVS is a large-scale cross-national survey with four waves covering the 1981–2008 period. In our study we use data from all four waves wherever available. Overall, a total of 48 countries are included in the cumulative dataset based on the four EVS waves.
Family Ties
In line with the benchmark studies that study the role of family ties (e.g. Alesina and Giuliano 2010) we use three questions to construct the family ties index. The first question asks how important family is for the respondent’s life. Answers vary from 1–4 with “1” indicating that it is not important at all and “4” indicating that family is very important. The second question asks whether love and respect to parent is taken as given or whether it should be earned: The value of “1” indicates that it should be earned while the value of “2” indicates that it should always be taken for granted. The third question asks whether parents should fulfil their responsibilities towards their children at the expense of their own well-being: The value of “1” indicates that they should not sacrifice their own well-being whereas “2” indicates that they should do the utmost best for their children.
It should be noted that, in the original data from the EVS, answers with higher scores indicate a lower strength of family ties. To avoid confusion and misunderstanding, we have transformed the variables in the manner described previously. Hence, in all three questions, higher values correspond to stronger family ties. Furthermore, note that, in order to reduce the number of variables and to combine the three components to a single variable, our approach is to conduct a principal component analysis and to employ the first component as the explanatory variable.
Corruption-Related Attitudes
In order to measure corruption-related attitudes at the individual level, we use a question that explores whether respondents justify accepting a bribe.[13] The variable takes values from 1 to 10 with 1 corresponding to “never” and 10 corresponding to “always”. Thus, higher values of the variable are associated with more favourable views – and, therefore, a greater inclination – towards corruption.
Various papers have used this variable as a proxy for corruption, see e.g. Torgler and Valev (2010) and Litina and Palivos (2016) who associate corruption with measures of bribe acceptance and tax cheating. With regard to our own correlations, we have found that this measure (when aggregated at the country level) has a positive correlation with cross-country measures of corruption, such as the Corruption Perceptions Index or the ICRG Corruption Index.[14]
Reduced-Form Specification
Our main empirical analysis focuses on testing a hypothesis that is conceptually closer to the underlying message of Proposition 2, as it considers the impact of the intensive margin of family ties. We estimate the reduced-form specification term
where CA ict denotes the attitudes towards corruption (i.e. accepting a bribe) of an individual i who lives in country c and participates in round t, and FT ict is the measure of family ties, i.e. the principal component of the previously mentioned variables. The variable Controls ict is a vector of individual-level controls including age, age squared, gender, education, religion and employment status. The term I c denotes country fixed effects and aims to capture unobservables associated with the country in which individuals reside, and R t denotes EVS round fixed effects, thus capturing unobservables related to the timing of the interview that are common across countries. Finally, ɛ ict is the error term.[15]
Naturally, our coefficient of interest in Eq. (30) is a 1. This will identify the impact of family ties on the proxy of corruption-related attitudes, accounting for other individual characteristics as well as country and year effects. A point worth mentioning is that the country fixed effects absorb elements that are explicitly mentioned in the model, such as the role of government and the level of public goods. This does not imply that these factors do not play a role in our empirical analysis. On the contrary country fixed effects are crucial in terms of identification, precisely because they capture the important role played by differences across countries in all these respects. We just net out these effects via the use of fixed effects so as to uncover the role played by family ties on corruption, conditional on all these controls.
“Should I Stay or Should I Go?”
Once we obtain the reduced form results, we make a further attempt to nail down one of the important characteristics of our theoretical model, i.e. the proximity to the family in terms of location. We argue that people who have stronger ties with their family may choose to stay close to them at the expense of their productivity, while those with looser family ties are more likely to change location – which ultimately results in higher productivity as already argued in Alesina and Giuliano (2010).[16]
According to Proposition 2, the impact of the strength of family ties on corruption is unambiguously negative. Based on this prediction, we expect that if we split the sample into those who stay vs those who leave their parents’ location, the former will be the ones who are primarily driving the result of the decline in corruption. The EVS allows us to identify people who move across NUTS regions. There is one question asking them in which NUTS region they lived when they were aged 14 and in which NUTS region they currently live. We thus assume that the NUTS region at age 14 is the region in which they lived with their parents and the current one is the new residency most likely chosen for occupational reasons. Of course, we cannot preclude the family moving along with the respondent. Nevertheless, we treat these deviations as non-systematic as we do not see any plausible arguments to suggest anything systematic in such cases. Furthermore, we restrict our sample of movers and stayers to working age population aged 18–65.
In Table 1 we present the summary statistics for stayers vs leavers for income and for the strength of family ties variable. We observe that, in line with our model assumptions, stayers manifest both stronger family ties and have lower income as compared to leavers.
Summary statistics for leavers versus stayers.
| Obs | Mean | Std | Min | Max | |
|---|---|---|---|---|---|
| Stayers | |||||
| Family ties | 44,028 | 0.034 | 1.083 | −5.156 | 0.865 |
| Income | 44,028 | 4.466 | 2.660 | 1 | 12 |
| Leavers | |||||
| Family ties | 3706 | −0.035 | 1.131 | −5.156 | 0.865 |
| Income | 3706 | 5.171 | 2.681 | 1 | 12 |
Given the above, we estimate the following equation:
The notation is exactly as in Eq. (30). The only difference lies in the terms a
1FT
ict
× I
stayers and
3.2 Empirical Results
Benchmark Specification
Table 2 reports all the benchmark and robustness results. The dependent variable is everywhere whether individuals find it “Justifiable: Accepting a bribe”. The analysis controls for the full set of relevant demographic, socio-economic and household characteristics (i.e. age, age squared, gender, education, religion and employment status), as well as the EVS round and country fixed effects.
Family ties and corruption-benchmark analysis and robustness.
| (1) | (2) | (3) | (4) | (5) | (6) | |
|---|---|---|---|---|---|---|
| Justifiable to “Accept a Bribe” | ||||||
| Benchmark analysis | Stayers | Robustness | Stayers versus | Robustness alternative | Robustness alternative | |
| versus leavers | regional FE | leavers regional FE | measure of family | measure of family | ||
| I. F. Ties (PC) | −0.094*** | −0.112*** | −0.146*** | |||
| (0.018) | (0.016) | (0.023) | ||||
| F. Ties (stayers) | −0.150*** | −0.106*** | ||||
| (0.022) | (0.007) | |||||
| F. Ties (leavers) | −0.117*** | |||||
| (0.004) | ||||||
| F. Ties (sum) | −0.111*** | |||||
| (0.016) | ||||||
| F. Ties (WVS) | −0.101*** | |||||
| (0.016) | ||||||
| Obs. | 69,432 | 35,203 | 23,248 | 35,203 | 78,239 | 105,095 |
| R-Sq. | 0.082 | 0.094 | 0.135 | 0.094 | 0.080 | 0.094 |
| Survey round FE | Yes | Yes | Yes | Yes | Yes | Yes |
| Country FE | Yes | Yes | Yes | Yes | Yes | Yes |
| Other controls | Yes | Yes | Yes | Yes | Yes | Yes |
-
This table establishes that stronger family ties are associated with less favourable attitudes towards corruption. The analysis controls for individual characteristics such as age, age squared, gender, educational level, employment status, religious denomination as well as for EVS (WVS for Column 6) round and country fixed effects. (i) the attitudes-related variables, i.e. justifiable to accept a bribe, take values from 1–10 with 10 indicating “always justifiable”; (ii) the “family ties” variable is the principal component (sum for Column 5) of three variables, “how important in family in your life”, “love and respect parents: always/earned”, “parents’ responsibilities to their children: at expense of/not sacrifice own well-being”. Higher values of the variable indicate stronger family ties; (iii) Robust standard error estimates, clustered at the dimension of the country of origin, are reported in parentheses; (iv) *** denotes statistical significance at the 1% level, ** at the 5% level, and * at the 10% level, all for two-sided hypothesis tests.
Overall, we find that stronger family ties are associated with less favourable attitudes towards corruption. In terms of magnitude, the coefficients reported are standardised beta coefficients. The coefficient is approximately −0.1 suggesting that a unitary change in the standard deviation of the family ties measure is associated with a standard deviation change of around −0.1 in the proxy of corruption. Overall, these are not very strong effects, at least not for the full sample (as we shall see in Column 2, they will become stronger once we distinguish between people who leave their parents’ location and people who stay in it). Nevertheless, the coefficient is robust to having controlled for several demographic, country and time-invariant characteristics. The rational of findings is in line with the findings of Ljunge (2015) about the importance of familial experiences on the formation of civic values.
Column 2 reports the coefficients when we distinguish between each group explicitly. We observe that the coefficient is negative for both groups. Moreover, we note that it is the group of people who never moved away from their family’s location that has a stronger effect on corruption. The coefficients are expressed in standardized beta units and are around the value −0.15 for those who stay and −0.12 for those who leave. In other words, a unitary standard deviation increase in the principal component of family ties is associated with up to a 0.15 standard deviation reduction in our measure of corruption. This is a rather non-trivial effect. To make it more comprehensible, think that a unit change in the measure of family ties, which ranges between −5 and 0.8 (negative values appear due to the use of principal component analysis), is associated with a 0.7 change in the measure of corruption, which ranges between 1 and 10.
Robustness
Columns 3 and 4 replicate the analysis in Columns 1 and 2 by adopting a more stringent specification. Specifically, we employ a full set of regional fixed effects at the NUTS 2 level. The reason why we do not adopt this specification from the outset is because we have significantly fewer observations. Importantly though, the results remain highly significant and similar to the benchmark specification. Column 5 tests the robustness of the explanatory variable by employing another measure that is widely used in this literature. This is the sum of the three variables that are used as measures of the strength of family ties, as opposed to their principal component. To do this, we first make the three variables similar in terms of scale – in this case, we bring them to a scale from 1 to 2 – with higher values still indicating stronger family ties. Subsequently, we use their sum instead of the first component. We replicate the analysis using the same full set of controls. The results are – qualitatively and quantitatively – very similar. It should be noted that, although not reported here, similar results are also obtained if, instead of their sum, we use each of the three measures that are incorporated in the family ties index separately. Column 6 tests the robustness of the benchmark analysis, using the sample from the WVS instead. All the variables and the controls are defined in the same exact way, given that the two surveys (EVS and WVS) are standardised in terms of questions. The results are strikingly similar both qualitatively and quantitatively.
4 Conclusions
The purpose of this paper was to contribute to a further understanding of issues surrounding the relation between family ties and corruption. Our theoretical model showed that the overall effect of family ties on the incentive to be corrupt – and, therefore, on the incidence of corruption – can be ambiguous due to the presence of conflicting mechanisms. Our theory also pinpointed the possibility that the impact on corruption may be quite different, depending on the what measures family ties is. The latter could be either the population measure of the share of agents who abide by a desire for maintaining close family ties, or the micro-level measure of how strong the desire for close family ties actually is. This is a point with major implications, as it offers a theoretical foundation on why the conventional wisdom entailing cross-country reflections may be at odds with the outcomes of micro-level empirical investigations.
The empirical approach we adopted belongs to the latter category, as it used micro-level data to examine the effect of family ties on the approval of activities that proxy for corruption – activities such as bribery, tax evasion etc. Our empirical results verified that, at the individual level, stronger family ties are associated with reduced corruption, thus offering credence to the relevant result from our theory.
Naturally, our theoretical model is stylised in many respects, in order to ensure its analytical tractability and the clarity of the intuition. As a result, while it directs attention to some intuitive mechanisms, unavoidably it does not incorporate other examples that can identify additional links on the relation between family ties and corruption. For example, our theory is not explicit on issues relevant to Banfield’s (1958) discussion on “amoral familism” and on arguments concerning nepotism – both issues seen as reinforcing the view that strong family ties are a fillip for corruption. With regard to “amoral familism”, it seems more relevant to an environment where there is some sort of cultural transmission of attitudes on corruption, from parents to their offspring, as in Hauk and Sáez-Martí (2002) for example. While our intention is not to understate the significance of these dynamic issues, our static model and our empirical specification do not aim at investigating the historical evolution of attitudes on corruption and family ties. Our focus is on incentives for corrupt behaviour, taking as given the process that established the agents’ preferences for family ties, as well as all other structural and economic characteristics. In any case, one of the model’s mechanisms actually delivers a positive effect of family ties on corruption, albeit different to the mechanisms that are more commonly assumed. The fact that the model also delivers opposing mechanisms – to some extent driven by the clear distinction between the intensive and extensive margins of family ties’ measurement – is, in our opinion, a strength rather than a limitation, especially in light of our empirical approach and results. With regard to nepotism, we should reemphasise that our focus, in terms of both theoretical modelling and empirical specification, is on nuclear family ties. By definition, nepotism is the practice of favouritism in job offerings, that is based on kinship. Therefore, issues pertaining to nepotism would be more relevant to an investigation of extended kinship ties and their relation to corruption. Furthermore, since nepotism has a clear connotation of partiality in hiring decisions, it would require a framework where agents with different advantages emerging from their relatives’ employment, compete for public sector jobs. Again, although this is an interesting angle on the broad topic, it goes beyond the objective of our study.
Another rather strong assumption of the model involved civil servants’ productivity and salaries which, contrary to the private sector setting, are unaffected by agents’ choice to locate close to their immediate family. It should be noted, however, that the model’s set-up and mechanisms require an economic cost emanating from the family ties-induced choice to restrict the agents’ choice on where to reside and work. The location-related productivity differential in the private sector is sufficient to achieve this, in a manner that is also consistent with the existing literature (e.g. Alesina et al. 2015). An additional productivity differential for the public sector would not contribute significantly to our mechanisms and results, while imposing further technical complication that could potentially blur our results.
In general, we opted for a simple static model that focuses on the relation between the two variables of interest (nuclear family ties and corruption) without undermining the clarity of the mechanisms through the addition of factors that would have added unnecessary complication. This by no means imply that the previously mentioned issues are less important. On the contrary, they certainly represent a worth-pursuing avenue for future research.
Appendix A: Variable Definitions and Sources
A.1 EVS and WVS Variables
Family Ties
Family Ties (Principal Component): We use three questions to construct the family ties index. The first question is “How important is family in your life?”. Answers vary from 1–4 with 1 indicating “not at all important” and 4 indicating “very important”. The second question asks whether love and respect to parent is taken as given or whether it should be earned. 1 indicates that it should be earned and 2 that it should always be taken for granted. The third question asks whether parents should fulfil their responsibilities towards their children at the expense of their own well-being. 1 indicates that they should not sacrifice their own well-being and 2 that they should do the utmost best for their children.
Overall, in all three questions higher values indicate stronger family times. In order to reduce the number of variables and to combine the three components to a single variable we conduct a Principal Component Analysis.
Family Ties (Sum): This alternative measure of family ties is the sum of the same three questions. To take the sum we give the same scale to all the variable, i.e. from 1 to 2, with higher values indicating stronger family ties.
Attitudes Related to Corruption
Justifiable: To Cheat on Taxes: This variable answers to the question “To what extend do you find it justifiable to cheat on taxes?” The variable takes values from 1 to 10 with 1 denoting “never” and 10 denoting “always”.
Justifiable: To Claim Benefits: This variable answers to the question “To what extend do you find it justifiable to claim benefits one is not entitled to?”. The variable takes values from 1 to 10 with 1 denoting “never” and 10 denoting “always”.
Justifiable: To Take Bribes: This variable answers to the question “To what extend do you find it justifiable to take bribes?” The variable takes values from 1 to 10 with 1 denoting “never” and 10 denoting “always”.
Justifiable: To Avoid Fare on Public Transport: This variable answers to the question “To what extend do you find it justifiable to avoid fare on public transport?” The variable takes values from 1 to 10 with 1 denoting “never” and 10 denoting “always”.
Individual Controls
Age: The age of the respondent.
Female: A binary variable taking the value of 1 if the individual is female and 0 if the individual is male.
Education: Education is an ordered variable taking values from 1–3 with 1 denoting “tertiary completed”, 2 denoting “secondary completed” and 3 denoting “primary completed”. The same classification is used for the controls of paternal, maternal and spouse education.
Religion: Religion takes nine different values each associated with a different religious denomination.
Employment Status: The employment status of the respondent is a categorical variable taking values from 1–4 as follows: 1 is “full-time”, 2 is “part-time or self-employed”, 3 is “not participant (student, retired, other)” and 4 is “unemployed”.
Stayers vs Leavers: The EVS allows us to identify people who move across NUTS regions. There is one question asking them in which NUTS region they lived when they were aged 14 and in which NUTS region they currently live. Based on this variable we construct an index that takes the value 0 if the individual lives in the same NUTS as the one he lived when they were 14 years old and the value 1 otherwise.
A.2 Country-level Variables
Corruption
CPI: We use the Corruption Perception Index (CPI) as a proxy for corruption at the country level. The variable takes values from 1 (least corrupt) to 10 (most corrupt). We have rescaled the original index for consistency with the individual measures of corruption.
ICRG. We use the ICRG measure of corruption as a proxy for corruption at the country level. The variable takes values from 1 (least corrupt) to 6 (most corrupt). We have rescaled the original index for consistency with the individual measures of corruption.
Appendix B: Proofs and Extensions
Proof of Lemma 1
From (26) it is straightforward to establish that
Since the condition in (24) holds,
Proof of Lemma 2
Use the Proof of Lemma 1 to establish that
Proof of Lemma 3
Given (27), we have
An Extension with Transfers from Agents to their Parents
A counter-argument to the negative effect of strong family ties on the incentive to be corrupt has to do with the redirection of economic resources (including the “spoils” of illegal rent-seeking) towards the immediate family. In the context of our model, consider agents who care for their parents through the provision of financial resources, as long as they abide by strong family values. The argument is that, in this case, family ties may increase the incentive to be corrupt because this will increase their ability to provide for their families. Although this could be a valid mechanism, the extent to which it can completely revert our existing results is questionable. For example, consider a modification where the agents’ utility component
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Articles in the same Issue
- Frontmatter
- Research Articles
- Duty to Read vs Duty to Disclose Fine Print. Does the Market Structure Matter?
- Cobb-Douglas Preferences and Pollution in a Bilateral Oligopoly Market
- Epsilon-Efficiency in a Dynamic Partnership with Adverse Selection and Moral Hazard
- Management Turnover, Strategic Ambiguity and Supply Incentives
- Uninformed Bidding in Sequential Auctions
- Arrowian Social Equilibrium: Indecisiveness, Influence and Rational Social Choices under Majority Rule
- Family Ties and Corruption
- Social Efficiency of Entry in a Vertical Structure with Third Degree Price Discrimination
- Insufficient Entry and Consumer Search
- Quality Competition and Market-Share Leadership in Network Industries
- The Effects of Introducing Advertising in Pay TV: A Model of Asymmetric Competition between Pay TV and Free TV
- Redistributive Unemployment Benefit and Taxation
- Constrained Persuasion with Private Information
- A Dynamic Graph Model of Strategy Learning for Predicting Human Behavior in Repeated Games
- Relative Income Concerns, Dismissal, and the Use of Pay-for-Performance
- Delegation in Vertical Relationships: The Role of Reciprocity
- Step by Step Innovation without Mutually Exclusive Patenting: Implications for the Inverted U
- Data and Competitive Markets: Some Notes on Competition, Concentration and Welfare
- Notes
- Optimality of a Linear Decision Rule in Discrete Time AK Model
- Equilibrium Pricing under Concave Advertising Costs
Articles in the same Issue
- Frontmatter
- Research Articles
- Duty to Read vs Duty to Disclose Fine Print. Does the Market Structure Matter?
- Cobb-Douglas Preferences and Pollution in a Bilateral Oligopoly Market
- Epsilon-Efficiency in a Dynamic Partnership with Adverse Selection and Moral Hazard
- Management Turnover, Strategic Ambiguity and Supply Incentives
- Uninformed Bidding in Sequential Auctions
- Arrowian Social Equilibrium: Indecisiveness, Influence and Rational Social Choices under Majority Rule
- Family Ties and Corruption
- Social Efficiency of Entry in a Vertical Structure with Third Degree Price Discrimination
- Insufficient Entry and Consumer Search
- Quality Competition and Market-Share Leadership in Network Industries
- The Effects of Introducing Advertising in Pay TV: A Model of Asymmetric Competition between Pay TV and Free TV
- Redistributive Unemployment Benefit and Taxation
- Constrained Persuasion with Private Information
- A Dynamic Graph Model of Strategy Learning for Predicting Human Behavior in Repeated Games
- Relative Income Concerns, Dismissal, and the Use of Pay-for-Performance
- Delegation in Vertical Relationships: The Role of Reciprocity
- Step by Step Innovation without Mutually Exclusive Patenting: Implications for the Inverted U
- Data and Competitive Markets: Some Notes on Competition, Concentration and Welfare
- Notes
- Optimality of a Linear Decision Rule in Discrete Time AK Model
- Equilibrium Pricing under Concave Advertising Costs
