New Research on Participatory Governance and Tax Compliance

At the World Bank, we have published two new studies on the effect of citizen engagement on tax morale and tax compliance.

In the first, published last month, we examine the Brazilian case, using data from all 5,570 municipalities in the country. We focus on two types of institutions that municipalities can voluntarily adopt to give citizens the opportunity to voice their preferences on policies and spending: public policy councils and participatory budgeting. Municipalities who adopt these practices collect significantly more local taxes. For instance, the adoption of participatory budgeting leads to the collection of up to 39% more tax revenues. Overall, the increase in municipal budgets is equivalent to roughly 40% of their capital investment spending.

But how context-dependent are these findings?

In the second study, published last week, we present results from the largest cross-country experiment ever conducted on tax morale. A unique online experiment, the study involved 65,000 individuals across 50 countries from all continents. Our results show that regardless of government systems, levels of development and culture, citizens are more committed to tax compliance when they: i) are able to voice their preferences about government spending, and ii) learn about government oversight of public resources.

I hope you will enjoy the reading.

Of Governance and Revenue: Participatory Institutions and Tax Compliance in Brazil

Michael Touchton, Brian Wampler and Tiago C. Peixoto

Abstract: Traditionally, governments seek to mobilize tax revenues by expanding their enforcement of existing tax regimes and facilitating tax payments. However, enforcement and facilitation can be costly and produce diminishing marginal returns if citizens are unwilling to pay their taxes. This paper addresses gaps in knowledge about tax compliance, by asking a basic question: what explains why citizens and businesses comply with tax rules? To answer this question, the paper shows how the voluntary adoption of two different types of participatory governance institutions influences municipal tax collection in Brazil. Municipalities that voluntarily adopt participatory institutions collect significantly higher levels of taxes than similar municipalities without these institutions. The paper provides evidence that moves scholarship on tax compliance beyond enforcement and facilitation paradigms, while offering a better assessment of the role of local democratic institutions for government performance and tax compliance.

Voice and Punishment : A Global Survey Experiment on Tax Morale

Fredrik M. Sjoberg, Jonathan Mellon, Tiago C. Peixoto, Johannes Hemker and Lily L. Tsai

Abstract: An online survey experiment spanning 50 countries finds sizable improvements in tax morale when (a) the salience of anti-corruption efforts is increased and (b) citizens are allowed to voice their expenditure preferences to the government. These results hold very broadly across a uniquely large and diverse sample of respondents from all continents. The findings are consistent with theories emphasizing the role of democratic accountability, as well as of perceptions of legitimacy and “retributive justice,” in generating voluntary tax compliance. Implications and avenues for further research are discussed.

French Development Agency Champions the Commons as New Vision for Development

The word “development” has long been associated with the Western project of promoting technological and economic “progress” for the world’s marginalized countries.  The thinking has been:  With enough support to build major infrastructure projects, expand private property rights, and build market regimes, the poor nations of Africa, Latin America and Asia can escape their poverty and become "modern" -- prosperous, happy consumers and entrepreneurs poised to enter a bright future driven by economic growth and technology.

That idea hasn’t worked out so well.

As climate change intensifies, the ecological implications of growth-based “development” are now alarming if not fatuous. The 2008 financial crisis exposed the sham of self-regulating “free markets” and the structural political corruption, consumer predation and wealth inequality that they tend to entail.  And culturally, people are starting to realize, even in poorer countries, that the satisfactions of mass consumerism are a mirage. A life defined by a dependency on global markets and emulation of western lifestyles is a pale substitute for a life embedded in native cultures, languages and social norms, and enlivened by working partnerships with nature and peers.

It is therefore exciting to learn that Agence Française de Développement (AFD) – the French development agency, based in Paris – is actively considering the commons as a “future cornerstone of development.”

A key voice for this shift in perspective at AFD is Chief Economist Gaël Giraud, who boldly acknowledges that “growth is no longer a panacea.”  He compares the current economic predicament to the plight of the Red Queen in Lewis Carroll’s Alice in Wonderland, who had to keep running faster and faster just to stay in the same place.  (For a short video interview with Giraud, in French, click here.  Here is an AFD webpage devoted to various commons issues.)

In a blog post outlining his views of the commons and development (and not necessarily reflecting those of AFD), Giraud cited the loss of biodiversity of species as a major reason for a strategic shift in “development” goals. “The last mass extinction phase [of five previous ones in the planet’s history] affected dinosaurs and 40% of animal species 65 million years ago,” writes Giraud. “At each of these phases, a substantial proportion of fauna was lost within a phenomenon of a massive decline of biodiversity.”

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Beyond Development: The Commons as a New/Old Paradigm of Human Flourishing

On June 21, I gave a presentation to a number of staffers and others at the Agence Française de Développement in Paris outlining my vision of the commons as an alternative vision of "development."  The talk was entitled "Beyond Development:  The Commons as a New/Old Paradigm of Human Flourishing."  Here are my prepared remarks:

I am grateful to be back in your lovely city, and I am grateful for your invitation to speak today about the commons as a new vision of “development.”  As the planet reels from the slow-motion catastrophe of climate change, we are seeing the distinct limits of the prevailing paradigms of economic thought, governance, law and politics.  While collapse and catastrophe have their own lurid attraction to many, the human species – and our governments – have a duty to seriously entertain the questions:  What new structures and logics will serve us better?  How can we better meet basic human needs – not just materially, but socially and spiritually?  And can we move beyond rhetoric and general abstractions to practical, concrete actions?

After studying the commons for nearly twenty years as an independent scholar and activist, I have come to the conclusion that the commons hold great promise in answering these questions.  But it is not a ready-made “solution” so much as a general paradigm and organizing perspective – embodied, fortunately, in thousands of instructive examples.  The commons is a lens that helps us understand what it means to be a human being in meaningful relation to other people and to the Earth.  This then becomes the standard by which we try to design our social institutions.

Talking about the commons forces us to grapple with the checkered history of “development” policy and what it reveals about global capitalism and poorer, marginalized countries.  We have long known that development objectives tend to reflect the political priorities of rich, industrialized western nations, particularly their interests in economic growth and private capital accumulation. 

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New IDS Journal – 9 Papers in Open Government

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The new IDS Bulletin is out. Edited by Rosemary McGee and Duncan Edwards, this is the first open access version of the well-known journal by the Institute of Development Studies. It brings eight new studies looking at a variety of open government issues, ranging from uptake in digital platforms to government responsiveness in civic tech initiatives. Below is a brief presentation of this issue:

Open government and open data are new areas of research, advocacy and activism that have entered the governance field alongside the more established areas of transparency and accountability. In this IDS Bulletin, articles review recent scholarship to pinpoint contributions to more open, transparent, accountable and responsive governance via improved practice, projects and programmes in the context of the ideas, relationships, processes, behaviours, policy frameworks and aid funding practices of the last five years. They also discuss questions and weaknesses that limit the effectiveness and impact of this work, offer a series of definitions to help overcome conceptual ambiguities, and identify hype and euphemism. The contributions – by researchers and practitioners – approach contemporary challenges of achieving transparency, accountability and openness from a wide range of subject positions and professional and disciplinary angles. Together these articles give a sense of what has changed in this fast-moving field, and what has not – this IDS Bulletin is an invitation to all stakeholders to take stock and reflect.

The ambiguity around the ‘open’ in governance today might be helpful in that its very breadth brings in actors who would otherwise be unlikely adherents. But if the fuzzier idea of ‘open government’ or the allure of ‘open data’ displace the task of clear transparency, hard accountability and fairer distribution of power as what this is all about, then what started as an inspired movement of governance visionaries may end up merely putting a more open face on an unjust and unaccountable status quo.

Among others, the journal presents an abridged version of a paper by Jonathan Fox and myself on digital technologies and government responsiveness (for full version download here).

Below is a list of all the papers:

Rosie McGee, Duncan Edwards
Tiago Peixoto, Jonathan Fox
Katharina Welle, Jennifer Williams, Joseph Pearce
Miguel Loureiro, Aalia Cassim, Terence Darko, Lucas Katera, Nyambura Salome
Elizabeth Mills
Laura Neuman
David Calleb Otieno, Nathaniel Kabala, Patta Scott-Villiers, Gacheke Gachihi, Diana Muthoni Ndung’u
Christopher Wilson, Indra de Lanerolle
Emiliano Treré

 

World Development Report 2016: Digital Dividends

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The World Development Report 2016, the main annual publication of the World Bank, is out. This year’s theme is Digital Dividends, examining the role of digital technologies in the promotion of development outcomes. The findings of the WDR are simultaneously encouraging and sobering. Those skeptical of the role of digital technologies in development might be surprised by some of the results presented in the report. Technology advocates from across the spectrum (civic tech, open data, ICT4D) will inevitably come across some facts that should temper their enthusiasm.

While some may disagree with the findings, this Report is an impressive piece of work, spread across six chapters covering different aspects of digital technologies in development: 1) accelerating growth, 2) expanding opportunities, 3) delivering services, 4) sectoral policies, 5) national priorities, 6) global cooperation. My opinion may be biased, as somebody who made some modest contributions to the Report, but I believe that, to date, this is the most thorough effort to examine the effects of digital technologies on development outcomes. The full report can be downloaded here.

The report draws, among other things, from 14 background papers that were prepared by international experts and World Bank staff. These background papers serve as additional reading for those who would like to examine certain issues more closely, such as social media, net neutrality, and the cybersecurity agenda.

For those interested in citizen participation and civic tech, one of the papers written by Prof. Jonathan Fox and myself – When Does ICT-Enabled Citizen Voice Lead to Government Responsiveness? – might be of particular interest. Below is the abstract:

This paper reviews evidence on the use of 23 information and communication technology (ICT) platforms to project citizen voice to improve public service delivery. This meta-analysis focuses on empirical studies of initiatives in the global South, highlighting both citizen uptake (‘yelp’) and the degree to which public service providers respond to expressions of citizen voice (‘teeth’). The conceptual framework further distinguishes between two trajectories for ICT-enabled citizen voice: Upwards accountability occurs when users provide feedback directly to decision-makers in real time, allowing policy-makers and program managers to identify and address service delivery problems – but at their discretion. Downwards accountability, in contrast, occurs either through real time user feedback or less immediate forms of collective civic action that publicly call on service providers to become more accountable and depends less exclusively on decision-makers’ discretion about whether or not to act on the information provided. This distinction between the ways in which ICT platforms mediate the relationship between citizens and service providers allows for a precise analytical focus on how different dimensions of such platforms contribute to public sector responsiveness. These cases suggest that while ICT platforms have been relevant in increasing policymakers’ and senior managers’ capacity to respond, most of them have yet to influence their willingness to do so.

You can download the paper here.

Any feedback on our paper or models proposed (see below, for instance) would be extremely welcome.

unpacking

unpacking user feedback and civic action: difference and overlap

I also list below the links to all the background papers and their titles

Enjoy the reading.


When Citizen Engagement Saves Lives (and what we can learn from it)

When it comes to the relationship between participatory institutions and development outcomes, participatory budgeting stands out as one of the best examples out there. For instance, in a paper recently published in World Development,  Sonia Gonçalves finds that municipalities that adopted participatory budgeting in Brazil “favoured an allocation of public expenditures that closely matched the popular preferences and channeled a larger fraction of their total budget to key investments in sanitation and health services.”  As a consequence, the author also finds that this change in the allocation of public expenditures “is associated with a pronounced reduction in the infant mortality rates for municipalities which adopted participatory budgeting.”

Evolution of Expenditure Share in Health and Sanitation compared between adopters and non-adopters of PB (Goncalves 2013).

Evolution of  the share of expenditures in health and sanitation compared between adopters and non-adopters of participatory budgeting (Goncalves 2013).

Now, in an excellent new article published in Comparative Political Studies, the authors Michael Touchton and Brian Wampler come up with similar findings (abstract):

We evaluate the role of a new type of democratic institution, participatory budgeting (PB), for improving citizens’ well-being. Participatory institutions are said to enhance governance, citizens’ empowerment, and the quality of democracy, creating a virtuous cycle to improve the poor’s well-being. Drawing from an original database of Brazil’s largest cities over the last 20 years, we assess whether adopting PB programs influences several indicators of well-being inputs, processes, and outcomes. We find PB programs are strongly associated with increases in health care spending, increases in civil society organizations, and decreases in infant mortality rates. This connection strengthens dramatically as PB programs remain in place over longer time frames. Furthermore, PB’s connection to well-being strengthens in the hand of mayors from the nationally powerful, ideologically and electorally motivated Workers’ Party. Our argument directly addresses debates on democracy and well-being and has powerful implications for participation, governance, and economic development.

When put together, these findings provide compelling evidence for those who – often unfamiliar with the literature – question the effectiveness of participatory governance institutions. Surely, more research is needed, and different citizen engagement initiatives (and contexts) may lead to different results.

But these articles also bring another important takeaway for those working with development and public sector reform. And that is the need to consider the fact that participatory institutions (as most institutional reforms) may take time to produce desirable/noticeable effects. As noted by Touchton and Wampler:

 The relationships we describe between PB and health and sanitation spending, PB and CSOs, and PB and health care outcomes in this section are greater in magnitude and stronger in statistical significance for municipalities that have used PB for a longer period of time. Municipalities using PB for less than 4 years do exhibit lower infant mortality rates than municipalities that never adopted PB. However, there is no statistically significant difference in spending on health care and sanitation between municipalities using PB for less than 4 years and municipalities that never adopted the program. This demonstrates the benefits from adopting PB are not related to low-hanging fruit, but built over a great number of years. Our results imply PB is associated with long-term institutional and political change—not just short-term shifts in funding priorities .

If throughout the years participatory budgeting has produced  evidence of its effectiveness on a number of fronts (e.g. pro-poor spending), it is only 25 years after its first implementation in Brazil that we start to see systematic evidence of sound development outcomes such as reduction in infant mortality. In other words, rushing to draw conclusions at early stages of participatory governance interventions may result in misleading assessments. Even worse, it may lead to discontinuing efforts that are yet to bear fruit in the medium and longer terms.


10 Most Read Posts in 2013

Below is a selection of the 10 most read posts at DemocracySpot in 2013. Thanks to all of those who stopped by throughout the year, and happy 2014.

1. Does transparency lead to trust? Some evidence on the subject.

2. The Foundations of Motivation for Citizen Engagement

3. Open Government, Feedback Loops, and Semantic Extravaganza

4. Open Government and Democracy

5. What’s Wrong with e-Petitions and How to Fix them

6. Lawrence Lessig on Sortition and Citizen Participation

7. Unequal Participation: Open Government’s Unresolved Dilemma

8. The Effect of SMS on Participation: Evidence from Uganda

9. The Uncertain Relationship Between Open Data and Accountability

10. Lisbon Revisited: Notes on Participation


Why I’m Giving Money to BRAC

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Lauren and me at the final “fancy pants” party, summer 2006. Photo by Lindsay Moore.

Hey, for anyone expecting another combative post, sorry! This is going to be a bit more personal and boosterish.

On 22 January 2011, my friend Lauren Fleming died. I’ve already said about everything I have to say about it to about everyone I know who knew her, so this isn’t really going to be a post about her.  It’s just a bit of context.

More context, but less important. When I got a “real” job at USIP, back in 2007, I resolved that I was going to donate 10 percent of the portion of my take-home pay that I kept for personal use (as opposed to what I contribute to the joint account I share with my wife). This is less than the Giving What We Can pledge, but more than the The Life You Can Save pledge, so I figure it’s at least a good start. (My wife and I also give 5% of the after-tax income we contribute to our joint account).

I used to make my charitable donation as a lump sum on or around my birthday (since charitable organizations incur transaction costs on donations, other things equal you’re better off donating in larger amounts to a smaller number of organizations). But since Lauren’s death, I’ve been donating on or about January 22, in memoriam.

"Loan Process" by IFPRI-IMAGES on Flickr.

“Loan Process” by IFPRI-IMAGES on Flickr.

This is really just context and prologue to what I really wanted to talk about here, though, which is the organization I’ll be making my donation to this year: BRAC.

BRAC was founded as the Bangladesh Rehabilitation Assistance Commission (though the acronym seems to have floated free of that particular meaning).  Apparently it was originally just their founder putting some persons displaced by the cyclone up in his offices at Shell, where he was an accountant.

They have since expanded their operations massively, becoming by some reports the largest NGO in the world, with operations well beyond Bangladesh – it is also believed to be the largest NGO operating in Afghanistan (for most of the empirical claims, see the linked Economist and SSIR articles, by the way), and has operations in Pakistan, the Philippines, Sri Lanka, Liberia, Sierra Leone, South Sudan, Tanzania, Uganda, and Haiti.

A big part of BRAC’s core operation is microfinance, but they follow a “microfinance-plus” approach.  That is, one of its core businesses is microfinance, but it also provides education services (including a university), some advocacy, community-building, health care, etc.

There are a few key reasons to like BRAC.

First, and in many ways foremost, “it is a [global] Southern organisation from a poor country expanding to other poor Southern countries.” (10)  This is important for moral and ideological reasons. It breaks up invidious tendencies to cast poor countries always in the victim, never in the agent role. It has less of a neo-colonial savor, which isn’t nothing. On a more direct, but still moral, level, it means giving money to aid workers who do not enter their work with the social and economic baggage that many Western aid workers do.  For instance, BRAC employees are paid wages that are high for locals, and for Bangladeshis, but much more in line with local wages and standards of living.  The Southern origin of BRAC is also practically important – it means that many of its workers will have a deeper understanding of the global poor live than even the best-informed and sincerest Westerner.

Second, it ranks high on sustainability. Though BRAC does accept donations (hence this post), about 80% of their operating budget comes from their own activities (like the microfinance and seed banks).  Thought I’d throw something in there for my more business-minded readers.

Third, BRAC is very much involved in “frontline” services. They have a small advocacy unit, but the bulk of their work is still service provision, in a time when lots of the big Western NGOs are moving towards policy influence. Your mileage may vary on this – I have some skepticism about the ability to influence policy from the top-down, plus it’s my day job (sort of), so when I give money to aid I like to give it to groups that are largely focused on service provision.

There’s a worry here that I may have more to say about later on this blog – doesn’t direct service provision create dependence or a parallel government (that gets the real government off the hook)?  I worry more about the latter than the former – I don’t really worry about the former at all – but at the same time aid conditionality has had a mixed track record at best. Where governments are bad, I don’t see a lot of evidence that starving them of aid makes them much better (not that we shouldn’t care about making them better), especially when the aid is direct service provision rather than support to the government’s own coffers.  And direct support loses much of its moral lustre when the government already isn’t accountable to its people.

Fourth, on the other hand, warming the cockles of my policy-analysis heart, BRAC has a strong internal committment to monitoring and evaluation, including having a well-respected in-house research arm.  Even groups critical of it – more on that in a sec – note its committment to evaluation. In addition, BRAC is pretty heavily studied – and generally found to have a positive impact on poverty and development – by outside academics.

Fifth, BRAC has, since 2002, been doing innovative work to help the “ultra-poor.”  In a nutshell, the problem is that people at the very bottom of the socio-economic ladder are often unable to benefit from the traditional development programs to get a leg up – e.g., microfinance or access to education may not help them much because they are too ill and malnourished, or too socially marginalized, to make effective use of them.  To my eye, one of the most intriguing components of their approach is the community involvement angle. When BRAC starts up a poverty targeting program, one of the first steps is to engage the community in a participatory process of identifying the community members most in need and strategies to help them.  Community involvement in the resources and the progress of those poor is then  part of the ongoing strategy for addressing poverty. In part, apparently, this comes from the founder’s sensitivity to the ways in which social stratification in Bangladesh interfered with people coming out of poverty, which shows real insight (or maybe I’m just biased since it fits with the view I articulate in my own book, that social domination is the ur-vulnerability).

BRAC is, of course, not without its critics. In particular, I was a bit surprised and disconcerted to learn that GiveWell, an aid-evaluation org that lots of “let’s give more of our money to the poor” projects (like the two I link above) rely heavily on, does not recommend giving to BRAC.

But I will be honest that I cannot really tell why. The stated reason on their assessment page is that the research arm of BRAC does not provide any public evaluations of their employment or income programs (at the time of the 2009 review). But this seems to be at least partly inaccurate.  For instance, BRAC’s research arm has a report on the employment impact of their grants to small and medium enterprises, dated 2005 (GiveWell claims they searched on relevant terms, but I found it with “employment”).

In addition, GiveWell seems to move the goalposts in their assessments.  The only one of their top three charities that focuses on poverty alleviation (as opposed to medical research and implementation) is GiveDirectly, an org that transfers money directly to poor people in Kenya. Now, I have no problem with GiveDirectly – and I like their model, too. But GiveWell counts them as effective because there is evidence that they do in fact distribute their money, and there is no strong evidence (they feel) that the presumably good impact of giving poor people money is either not as good as it might seem, or that it is undercut by other bad effects. Meanwhile, their bar for BRAC is higher – not just that they conduct their programs, but that they be able to prove they alleviate poverty.

I’m happy to chat more about aid assessment methodology – it’s not my direct area of expertise, and something I’m still learning myself. But it leaves me pretty comfortable that giving to BRAC is a pretty good use of my money.

Of course, it doesn’t bring Lauren back.