given the substantial efficiency and equity costs of corruption that has been documented by research (Olken and Pande, 2012, provide a review)?

Before turning to what the literature has to say on the question of incentives of powerful leaders, it is worth discussing other evidence in the literature on how even when leaders try to institute anti-corruption reforms on the basis of economic principles<sup>6</sup> , these reforms often unravel. A growing body of evidence shows that despite evidence of short-run impact of some anticorruption initiatives, there is also evidence suggesting that the long-run impact may be very different. Olken and Pande (2012) review the evidence, finding a consistent pattern across countries of public officials adjusting to the new incentive regime and finding new ways to circumvent, or even sabotage the reforms,<sup>7</sup> such that corruption eventually rises again or appears in new forms. Furthermore, these authors conclude their review by indicating that we have little evidence to evaluate whether a swathe of anti-corruption reforms pursued by international development partners, such as the setting-up of independent anti-corruption agencies or the legislation of freedom of information, has impact in sustainably reducing corruption. The case studies referred to earlier provide qualitative and suggestive evidence that these reforms, popular with development partners, have been undermined and politically manipulated, with little reason to expect significant impact on corruption. In sum, what the evidence shows is that there _is_ a problem with the status quo—of widespread corruption—which needs reforms, but what those reforms are that would sustainably reduce corruption, is far from clear.

Stable norms of non-cooperation in society at large can explain why reform efforts by powerful leaders to incentivize reductions in corruption often fail. World Bank (2016) and (2017) review the evidence on how reform efforts by leaders to solve principal-agent problems within government agencies are stalled, repealed, or produce unintended consequences of displacing corruption to other avenues.

To take one example: bureaucrats leading India’s National Rural Health Mission identified absenteeism by frontline public health workers as a significant problem.<sup>8</sup> The bureaucrats responded with a technological innovation to enforce attendance: a biometric monitoring system to digitally capture the thumb print of each staff member at the start and end of the working day. Researchers invited to evaluate the impact of this initiative found a significant increase in the attendance and improvements in health outcomes. However, the results suggested that other forms of malfeasance, such as diversion of patients to private practice, and reductions in benefits to which patients are entitled, may have been substituted for absenteeism. Furthermore, the

> 6 There is evidence from high corruption contexts that applying some basic economic principles to solve principalagent problems, such as by increasing monitoring and enforcement, _does_ have impact. For example, Di Tella and Schargrodsky (2003) find that various initiatives to strengthen incentives to refrain from corruption in procurement in public hospitals in Argentina have impact in reducing corruption consistent with the predictions of standard economic models of bribing _a la_ Becker and Stigler.

> 7 Banerjee et al (2008) document the sabotage of time-stamp machines introduced in India to monitor attendance by public health workers.

> 8. This example is drawn from Dhaliwal and Hanna (2013) and pertains to the state of Karnataka in India. Rampant absenteeism by providers in the public sector has been documented in World Bank (2004), deemed as “quiet corruption” in World Bank (2010), and estimated to place a significant fiscal burden on states (Muralidharan et al, 2017).

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