Power of Information: Evidence From a Newspaper Campaign to Reduce Capture

Introduction

A common thread in most anticorruption programmes is the reliance on legal and financial institutions - judiciary, police, financial auditors - to enforce and enhance accountability in the public sector. However, in many poor countries, these institutions are weak and among the most corrupt. Not surprisingly, there are few recent examples of successful efforts to combat corruption and capture in public programmes.

A complementary approach takes the users of public services as a starting point. Rather than attempting to increase service providers’ accountability to policymakers alone, the idea is to also engage citizens at the bottom of the public service delivery chain by providing them with easy access to information on the workings of public programmes intended for their benefit. In this way, citizens will be empowered to demand certain standards and monitor and challenge abuses by officials they interact with in their daily lives.

Improving public access to information is a crucial part in this bottom up strategy. However, although buzzwords like “information,” “knowledge,” and “empowerment” pepper the current policy debate on development, there is little quantitative evidence on the impact of policy measures aimed at achieving them (Banerjee and He 2003). This paper attempts to reduce this gap.

We examine an unusual policy experiment - an information campaign in Uganda aimed at reducing the capture of public funds by providing schools (parents) with information to monitor local officials’ handling of a large school-grant programme. In the mid-1990s, a public expenditure tracking survey (PETS) revealed that for every dollar spent by the central government, the schools received only 20 cents on average (Reinikka and Svensson 2004).

As evidence of the degree of local capture became known, the central government enacted a series of policy changes. Specifically, it began to publish data on monthly transfers of capitation grants to local governments (districts) in newspapers. We use a repeat PETS to study the effects of increased public access to information as a tool to reduce capture and corruption.

The raw data suggest a large improvement. In 2001, schools received 80 percent on average of their annual entitlements. We first examine outcomes across schools with and without access to
newspapers. Intuitively, schools with access to newspapers have been more extensively exposed to the information campaign. The difference-in-differences estimates show that while the degree of capture was similar in the groups with and without access to newspapers in mid-1990s, the more extensively treated schools suffered significantly less from local capture in 2001.

Data from a simple knowledge test administered to head teachers provide additional support for the hypothesis that improved access to information has played an important role in reducing local capture. Specifically, we find that head teachers with access to newspapers, on average, are better acquainted with the rules governing the grant programme and the timing of releases of funds from the center. However, in a test of local and general knowledge, head teachers with access to newspapers score as well as those lacking access, suggesting that it is information on the grant programme (disseminated through newspapers) rather than some unobserved characteristic (e.g., ability) correlated with newspaper access, that accounts for the observed effects.

Access to a newspaper, however, only identifies a causal effect of improved access to information under certain conditions. Specifically, newspaper access is partly endogenous. Moreover, a head teacher may be well-informed about the grant programme even if he/she does not have newspapers, when parents in the community where the school is located have access to them. To overcome these problems, we instrument for exposure to the information campaign by using distance to the nearest newspaper outlet.

Distance to the nearest newspaper outlet is significantly correlated with both schools’ access to a newspaper and head teachers’ test scores on knowledge of the workings of the grant programme, but uncorrelated with other types of knowledge or test scores that measure general ability. A strong (reduced form) relationship exists between proximity to a newspaper outlet and reduction in capture since the newspaper campaign started, which represents a significant change in pattern from the five-year period preceding the campaign.

Instrumenting for head teachers’ knowledge about the grant programme, we find that public access to information is a powerful deterrent to capture of funds at the local level. This paper relates to two different areas of research. There is a small but growing literature on the role of mass media in shaping public policy. Strömberg (2003, 2004) considers how the press influences redistributive programmes in a model of electoral policies, where the role of the media is to raise voter awareness and thereby increase the sensitivity of turnout to favors granted.

Besley and Burgess (2002) focus on the media’s role in increasing political accountability, also in a model of electoral policies. Our focus is on how the execution of already determined policies (a capitation grant program for primary schools) is affected by having more informed citizens. Empirically, we use micro data from schools rather than disaggregated national accounts data. Our work also links to the empirical literature on corruption. With few exceptions, this literature has three common features. It is based on cross-country analyses; it exploits data on corruption derived from perception indices, typically constructed from foreign experts’ assessments of overall corruption in a country; and it explains corruption as a function of the country’s politico-institutional environment.

The research on corruption and the media exemplifies this approach (see Brunetti and Weder [2003] and Ahrend [2002]). While the literature has provided important insights, it also has its drawbacks, including concerns of perception biases and causation. Our work complements the cross-country approach. We provide quantitative, microlevel evidence from a policy experiment on the effects of increased public access to information as a tool to combat capture and corruption.

The rest of the paper is organised as follows:

• Section II describes the pre-campaign situation and discusses findings from the earlier study on local capture.
• Section III lays out the key components of the public information
  campaign.
• Section IV describes the survey data used in the empirical analysis and the method used to quantify capture.
• Section V presents the empirical evidence, and
• Section VII concludes.