Bribes and gifts

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Abstract
One person's bribe is another's gift. When disparaging a monetary quid pro quo, critics call it a bribe, whatever its legal status. Bribes are bad, and gifts are good. Being too mercenary is suspect, but living off the generosity of others is also disreputable. Into this set of rough and ready judgments comes the cheerfully philistine economist to argue that bribes are good and gifts are payments for expected benefits. Corrupt officials are efficient, and pure altruism does not exist. But such reductionism ignores the moral force of labels. If a payment is viewed as an immoral bribe, many people will refuse to pay or accept one even if someone explains to them that the transaction is efficient and fair. Conversely, if a payment is described as a gift, people who try to be good and generous may be eager to contribute even if the consequences are pernicious. Values are not, however, immutable. Society delimits the boundaries between unacceptable bribes and acceptable gifts and prices. It does this with legal strictures and social norms. The state can signal the seriousness of an infraction by the level of law enforcement and the size of the penalties. People are deterred from bribery, not just by the fear of being caught, but also by the state's clear signal that such behavior is unacceptable. Similarly, gifts can be encouraged through subsidy programs and tax breaks. People are encouraged to give not only because of the subsidy itself, but also because the subsidy signals that giving is a good thing to do.

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