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Economic Lecture Series at IIM Indore - Economics of Corruption

By : Guest on 11 February 2017 E-mail Print Report Abuse


Prof. Vivekananda Mukherjee of the Department of Economics at Jadavpur University in Calcutta, visited the Indian Institute of Management, Indore, on Friday, 10th February; he delivered a lecture on ‘Economics of Corruption’ as part of the Economic Lecture Series regularly conducted by the institute.

 

Prof. Mukherjee began by explaining the definition of corruption to the audience, comprising the teachers and students from the institute. He elaborated saying that corruption is an act that violates laws/norms of a society and causes inequity and inefficiency, also adding that whether an act is an act of corruption depends on the society and that corruption may not be considered bad when existing laws/norms do not ensure equity and efficiency.

 

 

He further went on to explain the three types of incentives to curb corruption – economic, social, and moral. He cautioned on using these carefully because they interact among themselves. He also spoke about how risk averse, risk neutral, and risk loving individuals react to enforcement. Responding to a doubt by one of the participants, Prof. Mukherjee agreed that the marginal cost of corruption is lower in an already corrupt society, and explained that the optimal amount of corruption in a society is not zero because there is a trade-off between the marginal cost of controlling corruption and the marginal benefit to the society.

 

Prof. Mukherjee also listed the economic costs of corruption, including costs of inequity and inefficiency, cost of enforcement, and effort/money expended for securing the benefit of corruption. He mentioned that a transfer of bribe is not a cost to society in terms of efficiency. Speaking about the inverse relationship between cost of bribe and frequency of bribes, he spoke of bribe acting as a deterrent of corruption.

 

 

The talk ended with Prof. Mukherjee enlightening the participants about the measures of corruption, various subjective and objective indices of corruption across the globe, and characteristics common to the most corrupt countries. The audience was left with a deeper and different understanding of corruption, thanks to Prof. Mukherjee’s vast knowledge base and experience.

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