If nearly everyone condemns corruption, why is it so hard to remove? Opinion polls in highly corrupt countries usually find large majorities who dislike bribery. Yet the practice survives changes of government, new laws and foreign aid programs. Researchers have offered several explanations, and the choice between them shapes what reformers try.

Principals and agents

The classic account treats corruption as a principal-agent problem. A principal, such as the public or a minister, delegates a task to an agent, such as a customs officer. The agent knows more about what happens at the border than the principal does, and can use that advantage to take bribes. The cure is better monitoring and incentives: audits, rewards for honesty and punishment for theft.

The political scientist Robert Klitgaard summed up the conditions for corruption in a short formula in his 1988 book Controlling Corruption: corruption equals monopoly plus discretion minus accountability. An official who is the only source of a permit, who can decide freely whether to grant it, and who answers to no one, holds a perfect position to sell it. Reduce the monopoly by allowing competing offices, limit discretion with clear rules, and add accountability through audits and appeals, and the opportunity shrinks.

Rents and rent-seeking

Economists add the idea of rents: extra returns created when a policy makes something artificially scarce, such as an import license or a taxi medallion. The economist Anne Krueger coined the term rent-seeking in 1974, building on earlier work by Gordon Tullock. It means seeking wealth from policy rather than creating new wealth. Lobbying for a protective tariff is legal rent-seeking; bribing an official for a scarce license is the illegal kind. Either way, effort goes into capturing wealth instead of producing it.

A collective action problem

In 2013 the political scientists Anna Persson, Bo Rothstein and Jan Teorell argued that the principal-agent model itself explains why many reforms fail. Those reforms assume honest principals exist to enforce the rules. Where corruption is systemic, the supposed principals, from ministers to voters, are part of the same system. A police chief who takes bribes will not monitor the officers below honestly.

They proposed treating systemic corruption as a collective action problem. Everyone might be better off in a clean system, but no single person can create one alone. If a teacher refuses to pay the bribe that gets her salary processed, she simply goes unpaid; being the only honest one brings costs without benefits. What each person does depends on what they expect everyone else to do. When most people expect corruption, joining in is the rational choice, and the expectation confirms itself. This is why corruption can stay stable for generations, and why reformers such as Rothstein have argued that change often requires a sharp, visible break that resets everyone's expectations at once, rather than slow tinkering.

Grease or sand?

A minority view once held that corruption could be useful. In the 1960s the economist Nathaniel Leff and the political scientist Samuel Huntington suggested that in rigid, overregulated economies bribes can speed things up, letting entrepreneurs get around pointless red tape. This became known as the "grease the wheels" argument.

Critics replied that officials who can collect bribes have a reason to create more delays. The Swedish economist Gunnar Myrdal made this point in 1968. Later evidence mostly supports the critics. Using surveys of firms in many countries, Daniel Kaufmann and Shang-Jin Wei found that firms paying more bribes spent more time with officials, not less. In a 1995 cross-country study, Paolo Mauro found that higher corruption went with lower investment. Correlations cannot prove causation on their own, but the grease theory has few defenders today.

Is it culture?

It is tempting to blame corruption on national character, and the diplomats' parking study from Level 2 seems to support that idea. But the same study showed something else. After New York won the right in 2002 to remove diplomatic license plates from cars with unpaid tickets, unpaid violations fell sharply among diplomats from nearly every country. Norms matter, but so do incentives, and both can change. Britain, Hong Kong and Denmark were all once considered corrupt.

Worked example

In a mid-sized town, a building permit takes eighteen months, and builders who pay a "facilitation fee" get theirs in two. Klitgaard's formula diagnoses the problem: one office issues all permits (monopoly), the rules are vague enough that any file can be declared incomplete (discretion), and nobody tracks how long applications take (accountability). Remedies follow: let two offices compete, publish a checklist that defines a complete file, and post processing times online. The collective action view adds a warning. If every builder pays and every clerk expects payment, a lone honest builder may go out of business before the reforms bite. Reform will need a visible break that changes expectations together: perhaps a public deadline after which every permit is granted automatically unless refused in writing with reasons.