Driving in New Delhi.

Driving in New Delhi.

The search for better economic policy.
June 23 2006 7:47 AM

Driving in New Delhi

Don't complain about standing in line at the DMV.

Traffic in New Delhi. Click image to expand.
Traffic in New Delhi

At least in principle, some kinds of government corruption are not so bad because they promote efficiency in how regulations are administered. Harvard political scientist Samuel Huntington has argued that "the only thing worse than a society with a rigid, overcentralized, dishonest bureaucracy is one with a rigid, overcentralized, and honest bureaucracy." But a new study of driver's license examinations in New Delhi, India, confirms what most international policy wonks have long said: The benefits of corruption are not worth the costs.



But DMVs exist for a purpose other than provoking frustration. They're supposed to reduce unsafe driving. If I am selfish, I will take insufficient precautions: for example, hitting the road before I've learned about the brake as well as the accelerator. To correct this, governments like India's employ licensing clerks, ostensibly to screen applicants for driving ability.

Do the clerks in fact do so? To study the process of getting a driver's license in New Delhi, the authors of the new study—economists from the World Bank, the University of Chicago, New York University, and the Massachusetts Institute of Technology—recruited 822 Indians who wanted a driver's license, randomly assigning them to three groups. 

India is a good place to study corruption. On a 10-point corruption scale devised by Transparency International, where 10 is squeaky clean and 0 is completely corrupt, in 2005 India came in about 90th among 159 countries, with a score of 2.9. By comparison, Iceland was least corrupt (9.7), while Chad and Bangladesh tied (at 1.7) for most corrupt. (The United States was 17th-least corrupt, coming in between Germany and France with a score of 7.6.) 

One of the groups in the Indian study was offered a cash bonus for getting a license within 30 days. These subjects had an incentive do whatever was necessary (offer bribes) to get a license quickly. If bribes work, these applicants would get their licenses faster. A second group was given driving lessons. If the licensing process accurately screens out unprepared—and therefore more likely unsafe—drivers, then these applicants should be more likely to succeed in getting a license. Both of these applicant groups were compared to a third control group who received neither lessons nor a speedy completion bonus. The authors kept track of who got a license, as well as how much time and money the applicants spent in the process. Eventually, they gave their subjects a follow-up written exam to gauge their driving skills.



Perhaps the aspiring drivers who hired agents were better-qualified, so that their higher licensing rates and circumvention of the exam did not put other people at risk? Dream on. The drivers who used an agent had much lower scores on the follow-up drivers exam given by the researchers.

This study confirms the view of the World Bank, which "has identified corruption as among the greatest obstacles to economic and social development." Payoffs at the Indian DMV may save some qualified drivers some time. But it has the bad direct effect of allowing unsafe drivers on the road. And it has an even more corrosive indirect effect: If bribes are more likely to get them a license than driving lessons, applicants have too little incentive to learn how to drive before hitting the road—and each other. The lesson applies beyond the DMV. If bribing a procurement officer works better than building a solid airplane or bridge, why bother with safety checks? Dealing with by-the-book Pattys and Selmas is pretty unpleasant. But a world without them is much worse.

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