Disclosure by Politicians

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After 3 years in the making, the results of the research project that started as part of Doing Business and looks at transparency in government are out. The working paper, Disclosure by Politicians, a joint effort with Rafael La Porta (Dartmouth), Florencio Lopez-de-Silanes (EDHEC Business School) and Andrei Shleifer (Harvard), is the first to look at what disclosures are required by law, which of these are made public, in which countries someone actually checks whether the disclosures are made or not, and what penalties exist in the event of faulty or incomplete disclosures.

The findings can be summarized as follows: 1. public availability (when practiced) matters, while disclosure requirements that don't require public availability are of little consequence; 2 disclosure of income sources is more important than disclosure of magnitudes of assets, income, gifts, etc.; and 3. these impacts are greater in more democratic countries than in less democratic countries.

These findings imply that enforcement efforts (e.g., efforts to audit the declarations) are largely a waste of time and money in comparison to publication efforts. A triumph of Transparency International types and bad news for Department of Justice types. The paper also implies that failure to require detailed declarations of the values of particular (or even aggregate) assets is no big deal, since the real impacts come from revealing sources rather than magnitudes of holdings.

So what? Well, corruption fighters may want to focus more on designing asset and income declaration regimes so that they capture sources, while worrying less about how well they capture magnitudes of assets, income, etc. They may also be focusing on ensuring that such declarations are truly publicly available in practice, rather than on spending lots of money on building the enforcement capacities of the agencies responsible for receiving the declarations.

This is still just research and the results are now going to be exposed to a variety of academic and practitioners' reviews to check their robustness. The data have already been made available at Andrei Shleifer's website at Harvard, and soon the detailed country files will be posted on the internet (along with the texts of 1,300 relevant laws). This will hopefully spur further research.


Simeon Djankov

Senior Fellow, Peterson Institute for International Economics

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