Incentives, audits and procurement: Evidence from a district‐level field experiment in Ghana

Abstract

AbstractThere is growing affinity for audits as a tool to promote political accountability and reduce corruption. Nevertheless, knowledge about the mechanisms through which audits work remains limited. While most work on audits shows that they can work via citizen sanctions of bad performers, we emphasize that audit effects can also run through prospective incentives, that is, the desire to avoid poor audit results in the first place. We distinguish audits' impact on prospective incentives and sanctions using a field experiment in Ghana; districts were randomized into audit treatment conditions targeting district procurement and oversight of development projects. We assess the effect of audits on political officials using survey experimental data and show that officials respond powerfully to prospective incentives. In districts treated with top‐down audits, in‐party favoritism falls from 60 percent at baseline to 20 percent at midline, and rates remain at 19 percent at endline. This suggests that the audit's main effect occurred before the audit results were made public, and that prospective mechanisms play an important role in audit efficacy.