The Marginal Disutility from Corruption in Social Programs: Evidence from Program Administrators and Beneficiaries
Benjamin A. Olken
American Economic Review: Insights (Forthcoming)
Concerns about fraud in welfare programs are common arguments worldwide against such
programs. We conducted a survey experiment with over 28,000 welfare program administrators and
over 19,000 beneficiaries in Indonesia to elicit the ‘marginal disutility from corruption,’ i.e., the
trade-off between more generous social assistance and losses due to corruption. Merely mentioning
corruption reduced perceived program success, equivalent to distributing more than 26 percentage
points less aid. However, respondents were not sensitive to the amount of corruption—respondents
were willing to trade off $2 of additional losses for an additional $1 distributed to beneficiaries.
Program administrators and beneficiaries had similar assessments.