Quick win for government accountability

In an attempt to improve government transparency and accountability, Italian Prime Minister Mario Monti this week made his cabinet disclose their finances. The public was so curious that the government website crashed.

Is this a sensible step towards better governance?  A recent paper on disclosure by politicians says yes.

Djankov, La Porta, Lopez-de-Silanes, and Shleifer (2010) collect data on the rules and practices of financial and conflict disclosure by members of parliament in 175 countries.  They find that less than one third of countries make disclosures available to the public, and less than 15% of potentially useful information is presented. 

Why is such disclosure desirable?  Because it exposes discrepancies between politicians’ actual lifestyles and their official incomes, such as unaffordable second homes or luxury cars.   In addition, by disclosing sources of income, such as business connections, conflicts of interest can be avoided.  A potential problem is that such invasion of privacy could expose politicians to populist media coverage and deter highly qualified people from seeking office.  But, as they put it “if the political market is like other markets, then better information about the goods being transacted, such as politicians, improves market performance.”

To determine if disclosure is important for governance, they relate measures of public and internal disclosure, as well as sources of income to government quality.  They find that public disclosure is highly correlated with better governance and lower corruption - internal disclosure is not.  In addition, information on sources of income is more important than assets alone for governance.

How does the Middle East and North Africa stack up? Sixteen countries from the region are in their sample.  Of these, none require public disclosure and only five have some internal disclosure requirements.  Following the example of Monti, new governments in the region should consider disclosure requirements as a signal of the importance they place on transparency and accountability.