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The Welfare Costs of Corruption

[journal article]

Welsch, Heinz

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Abstract Corruption has been shown to affect a variety of economic indicators, especially GDP per capita. However, as GDP is not a genuine indicator of welfare, it may reflect the welfare costs of corruption only in an incomplete way. This paper uses self-rated subjective well-being as an empirical approximation to general welfare and shows that cross-national welfare - operationalized in this way - is affected by corruption not only indirectly, through GDP, but also directly, through non-material factors. The paper estimates the size of these effects as well as their monetary equivalent. The direct effect - not previously investigated in the corruption literature - is found to be substantially larger than the indirect effect.
Document language English
Publication Year 2008
Page/Pages p. 1839-1849
Journal Applied Economics, 40 (2008) 14
Status Postprint; peer reviewed
Licence PEER Licence Agreement (applicable only to documents from PEER project)