literature would anticipate. These findings remain robust, irrespective of the use of different dependent variable specifications, distributional assumptions, omitted variables (small/large datasets), or outlier observations.

# **Do Voters Use the EDD/NEDD Ratio to Explain the Level of Political Rent Extraction?**

Do voters really use the EDD/NEDD ratio to anticipate the level of rent extraction? So far this paper has shown that perceptions of the behavior of EDDs by elite experts vary, as anticipated, given the EDD/NEDD ratio. However, an additional test of the robustness of the theory is to examine whether in fact voters perceive that the EDD/NEDD ratio affects the average level of rent extraction in ‘political life.’ If the model is correct, and rent minimization occurs in the first stage due to the anticipated ability of voters to retrospectively punish/reward only EDDs (second stage), this outcome should also be observed. This is because voters can use the EDD/NEDD ratio to infer the proportion of senior policy-makers insulated from the incentives of elections, and will thus use this to infer the magnitude of rent extraction in political life (positive test). Furthermore, if this assumption of the model is correct, it should also be the case that perceptions of the level of rent extraction undertaken by policy-makers far removed from the control of elected officials, should not be predicted variation in the EDD/NEDD ratio, as such activities are rarely directly handled or supervised by elected officials (e.g. petty street level corruption) (negative test).

It is relatively easy to identify the sort of activities likely to fall (or potentially fall) under the oversight of elected officials, and those activities that will, even in high EDD/NEDD ratio countries, fall under the control of NEDDs. Rent extraction involving the passage of legislation, the abuse of parliamentary allowances, illicit payments to elected officials by lobbyists etc. are clearly the preserve of elected officials. Conversely, the demand for petty bribes to undertake routine administrative tasks, administrative malpractice (at the local level) etc., are the preserve of bureaucrats who are, at least in high-income democracies, far removed from the direct oversight of elected officials<sup>37</sup> .

Of course, on the margin, many activities can be undertaken by either bureaucrats or elected officials. Thus, laws may be passed by the legislature but formulated primarily by elected officials or bureaucrats (as determined by the EDD/NEDD ratio). Therefore, rents perceived to be associated with ‘political life’ (broadly defined to include macro-level governance, e.g. the making of legislation or ‘grand political corruption’) should be determined by the EDD/NEDD ratio, since a greater control of these activities by elected versus unelected officials affects the magnitude of career concerned rent minimization. Conversely, even if oversight of the bureaucracy is substantial, many everyday occurrences of ‘petty’ (family or personal) rent extraction are only very indirectly associated with elected officials. It is, therefore, irrational to expect voters to attach much significance to the competency of elected officials if lower level bureaucrats, not directly or easily accountable to elected officials, are held responsible for the actions of such actors.

Using the data from the Global Corruption Barometer (Transparency International, 2011) it is possible to examine whether voters’ perceptions of rent extraction in different policy domains does in fact conform to these predictions. The specific questions of interest are: (1) ‘Corruption is a significant problem in political life’ (yes/no/don’t know) and (2) ‘Corruption is a significant problem in personal/family life’ (yes/no/don’t know). Both questions are focused on corruption rather than the broader issue of rent extraction, which potentially generates measurement error and means that the results need to be treated with caution. However, despite this, the empirical evidence does conform to the expectations of the model.

As Table 1.06 shows, whether utilizing either the Additive or Factor measures of the EDD/NEDD ratio as well as the vector of all basic control variables, the results are consistent with the hypotheses generated by the theoretical model. Namely, the EDD/NEDD ratio robustly predicts declines in perceptions of rent extraction in the case of political life (Regression Model 1 and 2) but not in the case of rents in everyday life (Regression Models 3 and 4).

> 37 A point now conceded even by the ‘congressional dominance literature ’ (see Muller, 2001, pp. 386-405).

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