Here are some papers I have written, along with abstracts:
When do citizens tolerate corrupt, but competent, politicians? This paper formally establishes conditions under which citizens trade off corruption for competence. First, the regime has to be sufficiently democratic such that a corrupt politician has to bargain with citizens in order to stay in power. Second, the politician obtains rents largely by taking bribes in exchange for spending public funds, rather than by stealing the funds outright – in the former, citizens benefit from the public spending, while in the latter they get nothing. Under these two conditions, the bargaining power of both citizens and politicians are strong such that competence sustains corruption, and vice-versa.
“The Political Economy of Status Competition: Sumptuary Laws in Preindustrial Europe” (with Mark Koyama)
Sumptuary laws that regulated clothing based on social status were an important part of the political economy of premodern states. We introduce a model that rationalizes the use of sumptuary laws by elites to regulate status competition from below. Our model predicts a non-monotonic effect of income – sumptuary legislation initially increases with income, but then falls as income increases further. The initial rise is more likely for states with less extractive institutions, whose ruling elites face greater status threat from the rising commercial class. We test these predictions using a newly collected dataset of country and city-level sumptuary laws.
“Grand Corruption by Public Officials: Measuring Theft and Bribery”
A public official who has discretionary power over the government budget can obtain rents by stealing government revenues or receiving bribe payments in exchange for spending those revenues on public goods and services. I propose a method of simultaneously measuring these two kinds of grand corruption. I then demonstrate it using newly collected data from asset declarations of municipal mayors in the Philippines. The results suggest that an increase in government revenues increases theft, but decreases bribes by a larger extent such that total corruption falls. However, public good provision also declines since some of the additional revenues are stolen.
“Public Goods, Corruption, and the Political Resource Curse“.
When do resource revenues increase corruption? I develop a model of public good provision by a politician who obtains rents by stealing government revenues or extracting bribes in exchange for public goods spending. I show there is a threshold level of revenues below which the politician cannot steal, and therefore obtains rents only from bribes. Higher revenues unambiguously increase public goods spending because nothing is stolen, and decrease corruption (in the form of bribes) if the marginal social value of the public goods is sufficiently high. Above this threshold, revenues have no effect on spending, but unambiguously increases corruption (in the form of theft). Hence, a political resource curse emerges when resources provide ‘too much’ government revenues – that is, beyond a threshold level that corrupt politicians would credibly spend on public goods.
“Formal Models of the Political Resource Curse”, 2018. Economics of Governance 19(3): 225-259. pdf
By surveying formal models, I demonstrate that the political resource curse is the misallocation of revenues from natural resources and other windfall gains by political agents. I show that the curse always exists if political agents are rent-seeking, since mechanisms of government accountability, e.g. electoral competition, the presence of political challengers, and even the threat of violent conflict, are inherently imperfect. However, the scope for rent-seeking becomes more limited as the competition over political power that threatens the incumbent government becomes more intense.
“What Resource Curse? The Null Effect of Remittances on Public Good Provision”. Journal of Theoretical Politics. doi.org/10.1177/0951629818791033.
Existing formal models show that remittances generate a resource curse by allowing the government to appropriate its revenues toward rents, rather than public good provision. Households spend their remittance income on public-good substitutes, thereby alleviating the pressure on the government to provide public goods. However, the process by which the government survives the implicit threat of political challengers remains unspecified. By explicitly modeling political competition, I show that there is actually no resource curse from remittances. When there are challengers who can threaten to replace the incumbent leader, the best that any challenger can do is to offer not to take advantage of households’ provision of public-good substitutes, which induces the incumbent to try to match the offer. In equilibrium, public good provision is independent of remittances. This result holds even when no challenger can credibly commit to maintaining her offer once she is in power.
“Prohibition vs. Taxation in Corrupt Environments” (with John V.C. Nye), 2017. Journal of Institutional and Theoretical Economics, 173(2): 239-252.
If corruption is rife and tolerated by society, imperfectly prohibiting the production of a good with strong negative social costs may paradoxically be more efficient at limiting quantity than legalizing and taxing producers. It becomes incentive-compatible for a corrupt government to enforce prohibition laws and credibly limit the amount of the good being supplied to the market in order to extract bribes from illegal producers. In equilibrium, the total quantity that is bought and sold is low. In contrast, when the good is both legal and taxed, the only way a corrupt government can extract rents from the good is to expropriate the tax revenues which are less easily diverted in incentive-compatible ways. Thus, it prefers a larger market in order to generate more taxes, and more of the undesirable good is supplied in equilibrium.
“Judicial Independence: Evidence from the Philippine Supreme Court 1970-2003”, 2015, in The Political Economy of Governance: Institutions, Democratic Performance and Elections, eds. Norman Schofield and Gonzalo Caballero. Springer.
Is the Philippine Supreme Court independent from the Executive branch? Using data from Haynie et al.’s (High courts judicial database version 1.2, 2007) High Courts Judicial Database, I compare how each of the ten Chief Justices from 1970 to 2003 decides cases involving the national government 2 years prior and 2 years after their appointment as Chief Justice, in a difference-in-differences framework. To verify whether differences could be due to selection bias from the possible non-random assignment of cases and strategic timing of decisions, I also verify whether panels that did not include the Chief Justice exhibit differences in behavior during the same 4-year time periods. I find that they do not. In contrast, it is only the panels that include the Chief Justice which show some significant differences in the probability of favoring the government in its decisions pre- and post-appointment of the Chief Justice.
“Investment Pricing and Social Protection: A Proposal for an ICESCR-adjusted Capital Asset Pricing Model,” 2013 (with Diane A. Desierto). ICSID Review 28(2): 405-419 doi:10.1093/icsidreview/sit025.
This note proposes an adjusted re-specification of the standard Capital Asset Pricing Model (CAPM)—a valuation model increasingly being used in estimating compensation awards in international investment arbitrations—to take into account host States’ continuing social protection obligations under the International Covenant on Economic, Social and Cultural Rights (ICESCR). This note does not intend to add further normative and interpretive claims to the universe of scholarly arguments that has already put forward first-order defenses to insulate public interest-driven regulatory actions of host States from engaging international responsibility under investment treaties. Rather, we purposely focus on a second-order alternative defense, by means of scrutinizing the compensation valuation process within international investment arbitrations.
“2D:4D Asymmetry and Gender Differences in Academic Performance”, 2012 (with John V.C. Nye, Grigory Androuschak, Garett Jones, and Maria Yudkevich). PLoS ONE 7(10): e46319. doi:10.1371/journal.pone.0046319
Exposure to prenatal androgens affects both future behavior and life choices. However, there is still relatively limited evidence on its effects on academic performance. Moreover, the predicted effect of exposure to prenatal testosterone (T)–which is inversely correlated with the relative length of the second to fourth finger lengths (2D:4D)–would seem to have ambiguous effects on academic achievement since traits like aggressiveness or risk-taking are not uniformly positive for success in school. We provide the first evidence of a non-linear, quadratic, relationship between 2D:4D and academic achievement using samples from Moscow and Manila. We also find that there is a gender differentiated link between various measures of academic achievement and measured digit ratios. These effects are different depending on the field of study, choice of achievement measure, and use of the right hand or left digit ratios. The results seem to be asymmetric between Moscow and Manila where the right (left) hand generates inverted-U (U-shaped) curves in Moscow while the pattern for hands reverses in Manila. Drawing from unusually large and detailed samples of university students in two countries not studied in the digit literature, our work is the first to have a large cross country comparison that includes two groups with very different ethnic compositions.
“When Do Formal Rules and Informal Norms Converge?”, 2011 (with John V.C. Nye). Journal of Institutional and Theoretical Economics 167; 613-629
We propose evolutionary dynamics to show how rules converge into norms. Individuals play a game of upholding or rejecting a rule, and the more they uphold the rule, the more it becomes established as a norm. We find that when individuals are rational, the initial state determines whether the rule converges into a norm; when individuals are boundedly rational, convergence occurs only if upholding rules is a risk-dominant strategy. This suggests why big-bang reforms that affect only the initial state can fail, while gradualist approaches that can sustain the risk dominance of upholding rules may be more effective.
“Why Do Weak States Prefer Prohibition to Taxation?”, 2011 (with John V.C. Nye), in The Political Economy of Institutions, Democracy and Voting, ed. Norman Schofield and Gonzalo Caballero. Berlin: Springer-Verlag.
Why do weak states prefer prohibition to taxation? Desierto and Nye show that keeping an undesirable good illegal is more efficient than legalizing and taxing it, even if producers of the prohibited goods pay out large bribes to prohibition enforcers. If the bribes are recognized as revenues to the enforcers, this additional benefit keeps welfare losses small. This chapter further supports this finding with preliminary empirical evidence and graphical analyses of the likely net welfare losses from prohibition and taxation. It provides a positive rationale for the preference for prohibition in states prone to corruption and imperfect enforcement.
Desiree A. Desierto 