Taxation and Accountability: Experimental Evidence for Taxation’s Effect on Citizen Behavior

A paper by Lucy Martin (Yale)

In sub-Saharan Africa, low taxes co-exist with even lower government accountability, seen in high levels of corruption and low public goods provision. While there are existing theories of why taxation might be linked to better governance, many of the microfoundations of this effect remain unclear. I argue that taxation impacts governance by altering the expressive benefit citizens receive from sanctioning corrupt officials, making those who pay taxes more likely to hold leaders accountable. I provide new cross-national evidence that taxation and corruption are linked; I then formalize the theory and test the proposed mechanism using a set of laboratory-in-the-field experiments in Uganda. I find evidence that taxation activates a stronger fairness norm, leading citizens to demand more from leaders. This effect is strongest among adult, wage-earning men – exactly the group who has the most experience, historically, paying taxes in Uganda. I then propose additional tests, to be carried out in 2013, to strengthen and expand my findings.

And a tip for development professionals from the conclusion:

(…) aid professionals should seriously consider the role of formal taxation, as well as more informal community contributions, when designing development interventions. Adding some sort of community contribution to external aid programs could encourage give aid beneciaries more ownership over projects and, this paper suggests, make them more likely to hold local leaders accountable for how development funds are spent.

Read the full paper here [PDF].

Does transparency lead to trust? Some evidence on the subject.

As open government gains traction in the international agenda, it is increasingly common to come across statements that assume a causal relationship in which transparency leads to trust in government. But to what extent are claims that transparency leads to trust backed up by evidence?

Judging from some recent publications on the subject, such a relationship is not as straightforward as sadvocates would like. In fact, in a number of cases, the evidence points in another direction: that is, transparency may ultimately decrease trust.

Below is a brief overview of research that has been carried out on the subject:

Transparency has been trumpeted by many as the key to trust in government. The assumption is that if government organisations open up and show the public what decisions are made, how they are made and what the results are, people will automatically have more trust in government. But does transparency really lead to more trust? Or will it only provide critical citizens with more information to blame government again and again for small mistakes? Transparency and Trustexamines the effects of transparency on trust in a government organisation. By using an experimental method this study moves beyond normative or correlational research on transparency. In doing so, causal inferences regarding the relation between transparency and trust are allowed. Several objects of transparency and dimensions of information are being put to the test in three experiments. The experiments show that transparency is merely a ‘hygiene factor’: it does not contribute to higher levels of trust and it can even lead to lower levels of trust if people are disappointed with the degree to which government is transparent. This conclusion challenges current overly optimistic assumptions concerning the effect of transparency on trust.

Building on the notion of transparency as a strong democratic value and theories of procedural justice, this article reports an explorative experimental test whether transparency in decision making may lead to increased perceived legitimacy in terms of decision acceptance and trust. This is done in a context of difficult decisions of high importance for citizens – namely priority setting in public health care. An experiment was designed in which ordinary citizens were presented with a description of a case of priority setting between two groups with different health care needs. One group was given no information at all on the decision-making procedure, as an example of non-transparent decision making, and six groups were presented with different descriptions of the decision-making procedure, as examples of transparency in decision making. The transparent procedures were derived from three basic forms of democratic decision making: representation, direct participation and expert decision making. A second manipulation framed the decision-making procedure alternatively in positive or negative terms in order to capture media framing effects as well. According to the findings of the study, transparent decision-making procedures tend to weaken rather than strengthen general trust in health care – a finding that might reveal obstacles to attempts to strengthen the legitimacy of health care by employing transparent procedures. The results also show that while the form of decision making had no significant impact on perceived legitimacy, positive or negative framing of a decision-making procedure influences public perceptions of both the procedure and the decision outcome.

Of course, the impact of transparency on trust may vary according to the context:

 Transparency is considered a key value for trustworthy governments. However, the effect of transparency on citizens’ trust across national cultures is overlooked in current research. This article compares the effect of transparency on trust in government in the Netherlands and South Korea. The effect is investigated in two similar series of three experiments. The authors hypothesize that the effect of transparency differs because the countries have different cultural values regarding power distance and short- and long-term orientation. Results reveal similar patterns in both countries: transparency has a subdued and sometimes negative effect on trust in government. However, the negative effect in South Korea is much stronger. The difference in the magnitude of transparency’s effect suggests that national cultural values play a significant role in how people perceive and appreciate government transparency.

But some evidence goes even further, suggesting that transparency may have a demobilizing effect on citizens. And, if context matters, such a demobilizing effect might be particularly strong in the context of developing countries:

International organizations, policy experts, and nongovernmental organizations promote greater governmental transparency as a crucial reform to enhance accountability and curb corruption. Transparency is predicted to deter corruption in part by expanding the possibilities for public or societal accountability, that is, for citizens and citizens associations to monitor, scrutinize, and act to hold public office holders to account. Although the societal accountability mechanism linking transparency and good government is often implied, it builds on a number of assumptions seldom examined empirically. This article unpacks the assumptions of principal-agent theories of accountability and suggests that the logic of collective action can be used to understand why exposure of egregious and endemic corruption may instead demobilize the demos (i.e., resignation) rather than enhance accountability (i.e., indignation). We explore these theoretical contentions and examine how transparency affects three indicators of indignations versus resignation—institutional trust, political involvement, and political interest—given different levels of corruption. The empirical analyses confirm that an increase in transparency in highly corrupt countries tends to breed resignation rather than indignation.

Democratic theory often assumes that offering more information to voters will enhance electoral accountability. However, it is unclear whether corruption information translates into higher political participation and increased support for challengers. For example, information on corruption could lower the utility one gets from participating in elections at all. We provide experimental evidence that such information not only decreases incumbent support in local elections in Mexico, but also decreases voter turnout and challengers’ votes, as well as erodes partisan attachments. Our results suggest that while information clearly is necessary to improve accountability, corruption information is not necessarily suficient, since voters may respond to it by withdrawing from the political process.

Surely, transparency remains an essential – although quite insufficient – ingredient of accountability. On the trust issue, one could easily think of a number of scenarios in which it is actually better that citizens do not trust their governments. In fact, systems of checks and balances and oversight institutions are not specifically conceived under the logic of trust. Quite on the contrary, such institutional designs assume some level of suspicion vis-à-vis governments: as put in the Federalist Paper No. 51, “If angels were to govern men, neither external nor internal controls on government would be necessary.”

Granted, in some cases a perfect world in which citizens trust their governments may well be desirable. It may even be that transparency leads – in the long run – to increased trust: a great way to sell transparency to governments. But if we want to walk the talk of evidence-based policymaking, we may consider dropping the trust rhetoric. At least for now.

Open Government, Feedback Loops, and Semantic Extravaganza

Tom Steinberg recently brought up one of the most important issues for those working at the intersection of technology and governance. It refers to the deficit/surplus of words to describe the “field” (I call it field in the absence of a better word) :

(…) what primary movement or sector is mySociety part of? Or Avaaz? Or Kiva? Or Wikileaks? When I ask myself these questions, no obvious words or names race quickly or clearly to mind. There is a gap – or at best quite a bit of fuzziness – where the labels should go.

This lack of good labels should surprise us because these groups definitely have aims and goals, normally explicit. Also, it is unusual because social and political movements tend to be quite good at developing names and sticking to them.

I personally have witnessed the creation of a number of names, including e-democracy, e-participation, e-governance, government 2.0, and open government. While some may argue that these names are different among themselves, no real consensus exists about what differentiates them. The common denominator is some fuzzy notion that technology may promote more democratic and/or efficient forms of government.

But why the absence of stable terms and the profusion of neologisms? And what are the implications?

The appeal to novelty (argumentum ad novitatem), which asserts that something is superior because of its newness, seems to be one of the reasons behind the constant reinvention of terms. Indeed, adhering to such a logical fallacy might be particularly tempting for the technology community, where new solutions tend to be an improvement over older ones. On top of that, some technological millennialism does not hurt. After all, a constant of humankind is our inclination to think we are living unique moments. Coming up with new names partially fulfils our natural desire to belong to a special moment in history.

But coming up with new terms also allows for “semantic plasticity”, which enables those who use the terms to expand and contract their meanings according to their needs. Take the example of the term “open government data” and its ambiguous meanings: sometimes it is about accountability, sometimes it is about service delivery, other times it is both. Such ambiguity, some might claim, is opportunistic. It creates a larger consumer base that does not only include governments interested in openness as a democratic good, but also less democratically inclined governments who may enjoy the label of “openness” by publishing data that have little to do with accountability. Malleable terms attract larger audiences.

Moreover, new terms (or assigning new meanings to existing ones) also provides additional market entry-points. While it may take 10,000 hours of deliberate practice to become an expert at something, it only takes a few tweets to qualify as a new Gov 2.0 “guru”, an open government “thinker”.

But Tom Steinberg hits the nail on the head when describing why the profusion of names and their terminological inconsistency is problematic:

And this worries me because consistent names help causes to persist over time. If the field of AIDS research had been renamed every 6 months, could it have lasted as it did? Flighty, narrowly used language confuses supporters, prevents focus and is generally the enemy of long term success.

Indeed, the lack of terminological consistency in the field is a major obstacle to cumulative learning. And  worse, this problem goes beyond the name for “the field” as a whole, also affecting practices that are part of that very field.

As an illustration, recently some people from the development/opengov worlds have started to unrestrainedly employ the term “feedback loop”. While the understanding around the term (in its latest usage) is imprecise, it normally alludes to an idea of citizen engagement followed by some kind of responsiveness. If there is a reason for the use of the term “feedback loop” in the context of citizen engagement, no serious effort has been made to explain what it is. A term is thus assigned a new meaning to describe things that have been largely studied by others under different names.

I myself haven’t resisted and have used the term a couple of times, but this is not free from implications. For instance, Nathaniel Heller, is a prominent and astute voice in the international Open Government space. Recently, Nathaniel wrote a blog post asking “Is There a Case Against Citizen Feedback Loops”. To date, his post goes unanswered. But had he asked for instance about “the case against (or for) citizen engagement”, I believe a productive conversation could have ensued, based on a couple of thousands of years of knowledge on the matter. But the language defines the audience, and the use of terms like feedback loops reduces the odds of engaging in a  conversation with those who hold relevant expertise.

The major problem with this semantic extravaganza relates to the extent to which it blocks  the connection with existing knowledge. As new terms come up, the “field” starts, again, to be considered as a new one.  And the fact that the majority is unaware of evidence that may exist under other terminology leads to a collective illusion that the evidence does not exist. Then, the “we know very little” sentence starts to be repeated ad nauseam, opening the floodgates to all kinds of half-baked hypotheses (usually masked as “theory of change”) and unbridled calls for “evidence”.

Questions that have been asked in the past, and that have been answered either entirely or partially, re-emerge as if they were new ones. The process of answering these new questions starts again from zero. With neologisms, so dear to those working in “the field”, comes what they claim to despise the most: the re-invention of the wheel.

And these calls for “evidence” are undermined by their very lack of terminological and conceptual consistency – and disinterest in existing knowledge. To further complicate things, researchers and scholars who could potentially debunk the novelty myth may lack incentives to do so, as with the novelty narrative comes the prospect for increased visibility and funding.

But an immediate way out of such a situation seems unlikely. An embargo on the creation of new terms – or assigning new meanings to existing ones – would be neither enforceable nor productive, let alone democratic. Maybe the same would be true for attempting to establish a broad convention around a common vocabulary. But recognition by those working in the field that the individual incentives for such a terminological carnival may be offset by the collective benefits of a more consistent and accurate vocabulary would be a first step.

In the meantime, a minimal willingness to connect with existing knowledge would help a lot, to say the least.

Citizen Engagement Improves Access to Public Goods in Mexico

A paper recently published in World Development brings new and fascinating evidence from Mexico of the impact of participatory governance mechanisms on access to services.

Below are a few excerpts from the paper by Diaz-Cayeros, Malagoni, and Ruiz-Euler “Traditional Governance, Citizen Engagement, and Local Public Goods: Evidence from Mexico” (emphasis are mine):

The goal of this paper is to assess the effects of traditional governance on local public good provision. We ask whether poor indigenous communities are better off by choosing to govern themselves through “traditional” customary law and participatory democracy, versus delegating decisions concerning the provision of public goods to “modern” forms of representative government, structured through political parties. This is a crucial question for developing countries seeking to enhance accountability, and a central problem in the theory of participatory democracy.

Our research design takes advantage of an important institutional innovation in the state of Oaxaca, Mexico, that in 1995 allowed indigenous communities to choose their forms of governance. The reform gave full legal standing to a form of traditional indigenous governance called usos y costumbres (usos hereafter), which entails electing individuals to leadership positions through customary law in non-partisan elections, making decisions through participatory democracy, and monitoring compliance through a parallel (and often informal) system of law enforcement and community justice. If they did not choose usos, municipalities could opt instead for party governance, which entails the selection of municipal authorities through electoral competition among political parties and the adjudication of conflicts only through the formal institutional channels, namely the state and federal judiciary.


Our results show that electricity provision increased faster in those municipalities governed by usos. They also suggest that traditional governance may improve the provision of education and sewerage. With respect to citizen engagement and elite capture, contrary to existing scholarly work, we find no evidence of entrenchment of local bosses (caciques) associated with the former ruling party, the Institutional Revolutionary party (PRI) in places ruled by usos. Our findings suggest that traditional participatory forms of governance do not handicap democratic development. Furthermore, municipalities governed by usos are more likely to hold open council meetings allowing citizens to participate in decisionmaking processes. We attribute better public goods coverage to differences in local governance and collective decisionmaking practices. We suggest three specific channels through which traditional governance affects local public good provision: the social embeddedness of municipal presidents, broader civic engagement in collective-decision making, and credible social sanctions. We argue that traditional governance practices (which include in our setting decision-making through direct participatory practices, the obligation to provide services for the community, and the establishment of a parallel system of justice), allow poor communities to better hold their political leaders accountable, prevent elite capture, and monitor and sanction non-cooperative behavior.


Systems of governance based on electoral competition among political parties differ essentially from usos because decisions are taken by politicians without an ongoing process of consultation with the citizenry. The monitoring and sanctioning dynamics that come into play when citizens gather in public assemblies are usually absent in party-run municipalities, and thus the allocation of resources for public goods seems sub-optimal.


Differences between the two types of governance that we presented in the paper point to a broader discussion of the organization of democracy. The delegated format of decision-making in electoral democracies dominated by political parties seems to bear a higher risk of agency loss than deliberative decision-making of what is often referred to as participatory democracy. (…) there are lessons to be extracted from the fact that, with regard to the provision of some basic services, a non-partisan political arrangement presented some advantages over the widespread electoral and party-based democratic organization. Participation and collective monitoring of authority are hugely important to maximize collective well-being.

Read the full paper here [PDF].


Civil Society and Participation in Brazil: A Literature Review

This literature review is divided into six sections. The first section briefly describes the  theoretical and empirical background of debates about civil society and participation: the democratization process of the 1980s. The second section examines the first and second generation of studies of the best-known participatory mechanism in Brazil – participatory budgeting (PB). Next, this review turns attention toward research on policy councils, which fuelled more theoretical advances than studies of PB. A short section presents the few available studies about participation in the Northeast region of Brazil – a still largely unchartered territory in the literature. The fifth section discusses normative debates about the meaning and purpose of participation. Although the debate is not as contentious as it was in the early-2000s, two distinct views about participation still mark this literature. The last and longest section analyzes studies that treat citizen participation as a constitutive part of the representative system, which can help to improve government accountability and increase the quality of democracy.

Read full paper here [PDF].

Italian Politics 2.0: The Multifaceted Effect of the Internet on Political Participation

We investigate the impact of the diffusion of high-speed Internet on different forms of political participation, using data from Italy. We exploit differences in the availability of ADSL broadband technology across municipalities, using the exogenous variation induced by the fact that the cost of providing ADSL-based Internet services in a given municipality depends on its relative position in the pre-existing voice telecommunications infrastructure. We first show that broadband Internet had a substantial negative effect on turnout in parliamentary elections between 1996 and 2008. However, we also find that it was positively associated with other forms of political participation, both online and offline: the emergence of local online grassroots protest movements, and turnout in national referenda (largely opposed by mainstream parties). We then show that the negative effect of Internet on turnout in parliamentary elections is essentially reversed after 2008, when the local grassroots movements coalesce into the Five-Star Movement (M5S) electoral list. Our findings are consistent with the view that: 1) The effect of Internet availability on political participation changes across different forms of engagement; 2) It also changes over time, as new political actors emerge who can take advantage of the new technology to tap into the existence of a disenchanted or demobilized contingent of voters; and 3) These new forms of mobilization eventually feed back into the mainstream electoral process, converting “exit” back into “voice”.

Read full paper here [PDF].