Does Corruption Produce Unsafe Drivers - NBER Working Paper No. 12274 - May 2006

Sep 18, 2026

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We follow 822 applicants through the process of obtaining a driver’s license in New Delhi, India, to study how bureaucracy responds to individual and social needs. Participants were randomly assigned to bonus, lesson, and comparison groups. The bonus group received financial incentives for fast licensing, while the lesson group received free driving instruction. After licensing, a surprise test and surveys reveal corruption mechanisms: bureaucrats arbitrarily fail capable drivers, pushing individuals to bribe agents and avoid exams, undermining regulation’s purpose.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages43

Reading Time1 h 48 min

AccessFree to download

Introduction

Public service corruption and regulatory circumvention

The study context: obtaining a driving license

Research questions and the need to measure magnitudes

Abstract

NBER WORKING PAPER SERIES DOES CORRUPTION PRODUCE UNSAFE DRIVERS? Marianne Bertrand Simeon Djankov Rema Hanna Sendhil Mullainathan Working Paper 12274 [http://www.nber.org/papers/w12274](http://www.nber.org/papers/w12274) NATIONAL BUREAU OF ECONOMIC RESEARCH 1050 Massachusetts Avenue Cambridge, MA 02138 May 2006 This project was conducted and funded by the International Finance Corporation. We thank Anup Kumar Roy for outstanding research assistance. We are grateful to Abhijit Banerjee, Gary Becker, Ryan Bubb, Anne Case, Angus Deaton, Luis Garicano, Ben Olken, Sam Pelzman, Andrei Shleifer, Jakob Svensson and to seminar participants at Harvard, MIT, Princeton, University ofCalifornia at Berkeley, University ofChicago GSB, LSE, Yale University, NYU, Ohio State University, University ofFlorida and the ASSA 2006 meeting for helpful comments. The views expressed herein are those of the author(s) and do not necessarily reflect the views of the National Bureau of Economic Research. ©2006 by Marianne Bertrand, Simeon Djankov, Rema Hanna and Sendhil Mullainathan. All rights reserved. Short sections of text, not to exceed two paragraphs, may be quoted without explicit permission provided that full credit, including © notice, is given to the source. Does Corruption Produce Unsafe Drivers? Marianne Bertrand, Simeon Djankov, Rema Hanna and Sendhil Mullainathan NBER Working Paper No. 12274 May 2006 JEL No. ABSTRACT We follow 822 applicants through the process of obtaining a driver’s license in New Delhi, India. To understand how the bureaucracy responds to individual and social needs, participants were randomly assigned to one ofthree groups: bonus, lesson, and comparison groups. Participants in the bonus group were offered a financial reward ifthey could obtain their license fast; participants in the lesson group were offered free driving lessons. To gauge driving skills, we performed a surprise driving test after participants had obtained their licenses. Several interesting facts regarding corruption emerge. First, the bureaucracyresponds to individual needs. Those who want their license faster (e.g. the bonus group), get it 40% faster and at a 20% higher rate. Second, the bureaucracy is insensitive to social needs. The bonus group does not learn to drive safely in order to obtain their license: in fact, 69% of them were rated as “failures” on the independent driving test. Those in the lesson group, despite superior driving skills, are only slightly more likely to obtain a license than the comparison group and far less likely (by 29 percentage points) than the bonus group. Detailed surveys allow us to document the mechanisms of corruption. We find that bureaucrats arbitrarily fail drivers at a high rate during the driving exam, irrespective of their ability to drive. To overcome this, individuals pay informal “agents” to bribe the bureaucrat and avoid taking the exam altogether. An audit study of agents further highlights the insensitivity of agents’pricing to driving skills. Together, these results suggest that bureaucrats raise red tape to extract bribes and that this corruption undermines the very purpose of regulation. Marianne Bertrand Graduate School of Business University of Chicago 5807 South Woodlawn Avenue Chicago, IL 60637 and NBER [marianne.bertrand@chicagogsb.edu](marianne.bertrand@chicagogsb.edu) Sendhil Mullainathan Department of Economics Littauer 208 Harvard University Cambridge, MA 02138 and NBER [mullain@fas.harvard.edu](mullain@fas.harvard.edu) Introduction The provision of public services in many developing countries is rife with corruption. Some argue that such corruption is socially beneficial (Leff, 1964; Huntington, 1968; Lui 1985) . For example, Huntington (1968) remarks that “[I]n terms of economic growth, the only thing worse than a society with a rigid, overcentralized, dishonest bureaucracy is one with a rigid, overcentralized, and honest bureaucracy.” Other

FAQs

How were applicants assigned in the study of driver’s licensing corruption?

The study followed 822 applicants in New Delhi and randomly assigned participants to three groups: bonus, lesson, and comparison.

What incentive did each group receive?

The bonus group could earn a financial reward for obtaining a license quickly, while the lesson group received free driving lessons; the comparison group had no such incentive.

What did the surprise driving test and surveys show about corruption?

Corruption emerged through arbitrary failures during the driving exam, leading individuals to pay informal agents to bribe bureaucrats and avoid the exam, with agent pricing insensitive to actual driving skills.

Sep 18, 2026

Uploaded by Paura