Eduardo Rivera (Massachusetts Institute of Technology (MIT) - Department of Economics), Enrique Seira (Instituto Tecnológico Autónomo de México (ITAM) - Centro de Investigacion Economica), & Saumitra Jha (Stanford Graduate School of Business) have posted Democracy Corrupted: Apex Corruption and the Erosion of Democratic Values on SSRN. Here is the abstract:
Democratic values are eroding just as citizens perceive increasing corruption, with numerous cases implicating the highest-level politicians. Could perceived increases in apex corruption be weakening democracy? We first present event study analyses of more than 170 high-profile corruption scandals involving some of the most prominent politicians in 17 Latin American countries. We show that in the aftermath of such apex corruption scandals, support for democracy falls by 0.07𝑠𝑑, support for authoritarianism rises by 11% and violent protests rise by 70%. We complement these results with a field experiment in Mexico. Randomized exposure to footage of apex corruption scandals, particularly implicating politicians known for their anticorruption platforms, decreases individuals’ support for democracy by 0.15𝑠𝑑, willingness to trust politicians and neighbors in incentivized games by 18% and 11%, volunteering as election observers by 45%, and actual voter turnout by about 5𝑝𝑝, while raising stealing from local mayors by 4%. The undermining of democratic values produces latent effects that even cumulate four months later. Seeking solutions, priming national identity proved an unsuccessful antidote, but providing exposure to national stock index funds holds some promise.
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