Beyond the Duration of an Audit

Abstract

How can corruption control achieve a lasting impact? That is the question that my coauthor Yanying Hao and I seek to answer in this chapter. New York City relies on the revenue it collects from property taxes. However, local tax assessors have been known to accept bribes in exchange for reducing properties’ tax burden. Given this risk of corruption, we describe a field experiment that builds on a formal collaboration with the local government in order to test for the systematic undervaluing of properties in the city. Out of 211 properties, one-third was randomly assigned to a control group. The other two-thirds were randomly assigned to receive anticorruption audits. If there was widespread corruption in the city’s property tax system, then properties in the control group would tend to be assessed at a lower value compared to the properties that received added scrutiny because of the experimental treatments. However, the empirical results do not bear this out—there is no statistical difference in how properties were assessed across the three study groups. From these results, my co-author and I conclude that New York City is at a vantage point when compared with other places that seemingly suffer from endemic corruption in their built environment. This chapter theorizes as to why this might be the case.