Why poor people pay more bribes than rich people

February 18, 2013

Azam Ahmed has a report from Kabul’s ‘Car Guantánamo’ today:

Behind these walls are thousands of cars, trucks, vans, motorcycles and even bicycles, lined up in vehicular purgatory after falling afoul of the Kabul traffic police. Things that have landed cars in the slammer: illegal left turns, parking violations, involvement in fender-benders and, perhaps most egregious, failure to pay a bribe.

“I’ve been waiting two months to get my van back,” said Sayed Wahid, whose quest to reclaim it, after it was impounded for an expired international permit, propelled him on an exhausting odyssey through no fewer than six different government agencies…

In November, Mr. Wahid had driven his van from Kunduz down to Kabul when he was pulled over at a checkpoint in the capital. His license and car tags were clean, but a permit to cross international borders, though not needed for that specific trip, had expired.

For a moment, he said, he considered bribing the officer. He has regretted every day for the past two months his decision not to.

Ahmed explains that when it comes to Kabul’s traffic police, “the rules are unevenly applied, punitive to those who can least afford it, and mostly irrelevant to those with money and power.”

The point here is that it’s the poor, like Sayed Wahid, who are hit hardest by Kabul’s endemic corruption. Either they do the sensible thing, and pay a bribe they can ill afford, or else they’re at real risk of losing their livelihood. Meanwhile, the rich and powerful aren’t even asked to pay bribes: the police know better than to try this stunt on someone who could easily get them fired. It’s safe to solicit a bribe from a guy from Kunduz in a van; you’d have to be much braver to try it with a man in a suit driving a Mercedes.

It’s not that the rich don’t pay bribes at all; of course they do. But in general when the rich pay bribes, they tend to get even richer. That’s the deal: that’s business. When the poor pay bribes, by contrast, it’s a deadweight loss: it’s just money disappearing into the pockets of a corrupt official, never to be seen again.

A new paper by Shahe Emran, Asadul Islam, and Forhad Shilpi is instructive and sobering in this respect. Entitled “Admission is Free Only If Your Dad is Rich! Distributional Effects of Corruption in Schools in Developing Countries”, it looks at the cost, in bribes, of sending your kid to “free” school in Bangladesh. Exactly the same pattern is seen there as the one that Ahmed found in Kabul:

The results reported above in Tables 3 and 4 show that the poor are more likely to pay bribes. The estimates of Table 3 imply that a one percent lower income leads to a 0.73 percent increase in the propensity to pay bribes. The negative effect of income of propensity to pay bribe points to important role of a household’s “bargaining strength”. The richer households – with better bargaining power – are less likely to pay bribes than the poorer households. This is a depressingly perverse outcome given that the goal of free public schooling is to help the poor households, not to provide free schooling for the children of rich and influential only!!

Overall, households which paid a bribe to educate their children earned Taka 1930 per month, on average, while households which didn’t pay a bribe earned an average of Taka 2560 per month. And the bribes were large, too.

Among the households who reported positive amount of bribe payment, on average a household paid about Taka 241 during the survey year. To get a better sense of the financial burden imposed on the poor, it is instructive to look at the average bribe paid as a proportion of the household savings. The average bribes paid in schools is 9 percent of average annual household savings, while for the first and second quintile it amounts to 61 percent and 27 percent of annual household savings respectively.

The most famous line in Withnail and I is the point at which Withnail procures the key to his rich uncle’s cottage, explaining: “Free to those that can afford it, very expensive to those that can’t.” That phenomenon is well known: the richer you are, the more likely you are to be invited out to lunch, or dinner, or the Hamptons. But as we can see in Afghanistan and Bangladesh, the phenomenon doesn’t just apply to desirable luxuries such as the swag bags given out to celebrities at the Oscars. In the developing world, it applies to much more basic things, too, like the right to drive your car around Kabul, or the right to send your kid to a free school. And it’s not at all clear what if anything can be done about it.

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