Valuing the social cost of corruption using subjective well being data and the technique of vignettes

Abstract

Corruption can have an effect on people's happiness and satisfaction, and therefore, can generate a social cost. However, the perceptions of corruption and satisfaction can also vary across subjects, due to socioeconomic and cultural characteristics. This article studies the differences in the perceptions of corruption and satisfaction across subjects, utilizing the technique of vignettes for the correction of the bias that follows from the differences in the response scale across individuals. The evidence comes from a sample of citizens in Spain, who are asked about their perceptions of corruption and personal satisfaction. The results show that there exists a response scale bias, both for corruption and satisfaction. These results are utilized to approximate the social cost of corruption.