A Policy-Oriented Theory of Corruption

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Abstract
Perspectives from political science and economics are drawn on to suggest an integrated theory of governmental corruption. The theory is oriented toward policy choices, and corruption is viewed as a product of individual and structural variables that interact to produce both positive and negative consequences. Individual-level considerations such as greed and the likelihood of detection and prosecution suggest one set of policies for reducing corruption. Bureaucratic constraints, citizen participation, and the congruence of legal structures and social demands offer a competing set of concerns that must be dealt with in analyzing corrupt practices. We show that corruption, as a process, influences the optimal level of social welfare. Alternative conceptions are examined, and a model is developed to evaluate policy choices related to corruption from the perspective of welfare optimization. Applied to the analysis of corruption, the model integrates general equilibrium theory, deterrence theory, and structural conditions. Finally, policy implications are considered.