An amazing paper by the foursome Alberto Chong, Rafael La Porta, Florencio Lopez-de-Silanes, and Andrei Shleifer. They say it is incredibly preliminary but the broad idea is pretty much there.
They look at this issue of governance in a country. There are two reasons why we have bad govts:
At the broadest level, there are two reasons for bad government in developing countries: political economy and productivity. The political economy arguments hold that governments in poor countries are less accountable because citizens have few opportunities to exercise their voice (Hirschman 1970). As countries become richer and more educated, government responsiveness to citizen needs and hence its quality improves, in part because politics become more democratic and transparent
An alternative view of bad government in developing countries is low productivity of government services, similar to low productivity in the private sector. Part of the problem might be inferior inputs, including human and physical capital as well as technology. Part of the problem might also be poor management, including the lack of supervision and monitoring (Bloom et al. 2007, 2010a,b, 2012a,b; Lewis 2004).
They look at this second reason why an amazing experiment – the postal system in different countries:
In this paper, we propose one objective indicator of government efficiency, and use it to shed light on these two broad theories of the quality of government. Our indicator describes the performance of the mail system in accomplishing one simple task: returning an incorrectly addressed international letter. Between December 2010 and February 2011 we had sent letters to non-existent business addresses in 159 countries: 2 letters in each country’s largest 5 cities. Each envelope had a typed up address using the Latin alphabet, as required by international postal conventions, and included a return address at the Tuck School of Business in Hanover, New Hampshire, as well as a clear request to “please return to sender if undeliverable.” The addresses included an existent city and zip code (where available), but a non-existent business name and street address.
All countries subscribe to an international postal convention requiring them to return the letters posted to an incorrect address. We measured the fraction of letters that were actually returned, and how long it took the letters to come back from the date they were posted from Cambridge, MA.
Amazing. The analysis shows countries with better governance indicators returned the letters and in required time:
Our principal finding is that, despite the simplicity of the task, there is enormous variation in government efficiency as measured by the probability and the time of returning the letter. We got 100% of the letters back from 21 out of 159 countries, including from the usual suspects of efficient government such as Canada, Norway, Germany and Japan, but also from Uruguay, Barbados, and Algeria. At the same time, we got 0% of the letters back from 16 countries, most of which are in Africa but also including Tajikistan, Cambodia, and Russia. Overall, we had received 59% of the letters back over a year since they were sent out. Another measure we look at is the percentage of the letters we got back in 90 days. Only 4 countries sent all the letters back in 90 days (United States, El Salvador, Czech Republic, and Luxembourg), while 42 did not manage to deliver any back within 3 months. Overall, only 35% of the letters came back within 3 months.
As we understand the postal convention, the country has no more than a month during which it must return the letter, so very few countries complied with the postal convention they signed in this regard. In statistical terms, the variation in our measures of postal efficiency is comparable to the variation of per capita incomes across countries.
Then they look at reasons the reasons for this inefficiency. It seems countries which use Latin alphabets returned higher% of letters. This indicates there is a language problem. The public sector is also inefficient in these countries like the private sector…
Such study has two advantages:
Our approach to measuring government efficiency has two key advantages. First, we are looking at a fairly simple and universal across countries, government service.
Second, by design we are looking at a government service where neither corruption nor political patronage plays any role. It is actually impossible to ask the American sender of the letter for a bribe, since he is not available to pay it. Likewise, no larger political purpose is served by either returning the letter or throwing it out. It is a simple matter of postal employees doing their job or not doing it, where performance requires a rather small effort and very little human capital.
Fascinating from the word go…
Does not mention how Indian postal system fared…
