Econometrics & Applied Economics Seminar - Federico Masera (University of New South Wales)

Room 605, Level 6, FBE Building, 111 Barry Street, Carlton

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Title: Corruption Corrupts: Scandals and Supermarket Thefts by Giorgio Gulino (Universita' di Bergamo) and Federico Masera (University of New South Wales).

Abstract: This paper studies the effect of exposure to dishonest behavior on morality. We first use information from the leading Italian supermarket chain on shopper's behavior when using the save-time technology. This technology allows shoppers to declare what they are buying while shopping. Shoppers pay what they declared, not for what they bought. We observe random audits on shoppers done to monitor if there are any differences between their declaration and the content of their shopping cart. We then scrape online archives of local newspapers to identify the date and place of corruption scandals. In a Difference-in-Difference setting, estimates show that following a corruption scandal, in the municipality of the scandal, there is a fifteen percent increase in the probability that individuals declare less then what they actually bought. The effect starts immediately after the corruption scandal is made public and last for four days. Give that corruption scandals do not generate any changes in the material incentive of making a false declaration, we interpret this change in behavior as a change in the moral cost of stealing.