The Power of Example: Corruption Spurs Corruption

Abstract

Does political corruption erode civic values and foster dishonest behavior? I test this hypothesis in the context of Mexico by combining data on local government corruption and cheating on school tests. I find that, following revelations of corruption by local officials, secondary students' cheating on cognitive tests increases significantly. The effect is large and robust and persists for over a year after malfeasance is revealed. These findings are validated by evidence from individual survey data, which documents that individuals interviewed right after corruption is revealed report being less honest, less trustworthy, and more prone to thinking that cheating is necessary to succeed, compared to similar individuals interviewed just beforehand. (JEL D72, H70, I21, K42, O17, Z13)