• How rich are corrupt politicians?


    Not that much after all, answer Ray Fisman, Florian Schulz and Vikrant Vig in a recent paper that studies the wealth of Indian politicians, except maybe if they are appointed to cabinet-level posts in the state’s Council of Ministers.

    We study the wealth accumulation of Indian parliamentarians using public disclosures required of all candidates since 2003. Annual asset growth of winners is on average 3 to 6 percentage points higher than runners-up. By performing a within-constituency comparison where both runner-up and winner run in consecutive elections, and by looking at the subsample of very close elections, we rule out a range of alternative explanations for diff erential earnings of politicians and a relevant control group. The “winner’s premium” comes from parliamentarians holding positions in the Council of Ministers, with asset returns 13 to 29 percentage points higher than non-winners. The benefi t of winning is also concentrated among incumbents, because of low asset growth for incumbent non-winners.

    The findings are discussed and related to other recent academic contributions by Fisman in this Slate article. Of course, the main problem with such findings, as he acknowledges, is that they constitute at best a lower bound on the true returns to politics, as very corrupt politicians are likely to hide irregular income away in foreign accounts or under the names or relatives. There use to be a time when these were not afraid of living in houses that their salaries could never pay and of boasting an extravagant lifestyle, as the Stroessner family did in Paraguay until the 1980s. But as corruption increasingly came to be stigmatized in the 1990s and 2000s, corruption also likely became more sophisticated and harder to detect.

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