Unpaid Parking Tickets and Poor Nations

I enjoyed Tim Harford’s interesting article on the lessons that can be learned from unpaid parking tickets. (The question of whether poor nations intentionally thwart the creation of legal businesses in order to encourage bribery to maintain unlicensed businesses is fascinating.)

Harford is not comfortable with this finding from a study of which UN diplomats scoff at parking tickets:

Fisman and Miguel discovered support for the common-sense view. Countries with corrupt systems, as measured by Transparency International, also sent diplomats who parked illegally. From 1997-2005, the famously incorruptible Scandinavians committed only 12 unpaid parking violations, and most of them were by a single criminal mastermind from Finland. But over the same period of time, Chad and Bangladesh, regularly at the top of the corruption tables, managed to produce more than 2,500 violations between them. Perhaps poor countries are poor because they are full of corrupt people, after all.

Harford later notes that when New York City started towing illegally parked cars, the number of violations dropped. He sees that as an illustration of the power of incentives in poor nations. The problem is people like the unethical diplomats control the incentives in the poor nations.