Corruption and Life Satisfaction in Transition: Is Corruption a Social Norm in Eastern Europe?

Abstract

Abstract To explain a so-called “happiness gap” between citizens of Eastern Europe and comparable individuals from other regions, researchers have pointed at low governance quality, and corruption in particular, as a possible cause. However, this explanation seems incompatible with the “broken windows” paradigm, which posit that in high-corruption environment, victims of corruption tend to report a lower psychological cost of victimisation. Our paper contributes to the literature by explicitly tackling this potential contradiction. Our results nuance our understanding of the role of corruption on people’s life satisfaction in Eastern Europe by investigating the extent to which the subjective cost of corruption depends on its pervasiveness. We demonstrate: (1) large individual cost associated with different measures of corruption, (2) a small reduction in these costs for some measures of corruption as it becomes more pervasive and (3) large inequalities in the cost of corruption depending on education and income. Overall, we conclude that, for the population as a whole, there is limited evidence of corruption being a social norm in Eastern Europe, in the sense that pervasiveness does not reduce individual cost.