Given the generally accepted view that bribery is widespread around the world, it probably doesn’t make sense to get too hung up over the specific numbers. That said, I’ve seen the figure of (approximately) $1 trillion in annual bribe payments thrown around quite a bit, and I was curious where that number came from. It seems to me it would be very difficult for even the most intrepid researcher to come up with a plausible ballpark estimate of the total dollar amount of annual bribe transactions. After poking around a bit on the web and in some of the relevant literature, I’m coming up empty. Here’s what I can tell so far:
The literature citing the $1 trillion figure all seems to trace back to a 2004 on-line press release from the World Bank, entitled “The Costs of Corruption.” According to the release:
More than $1 trillion dollars (US$1,000 billion) is paid in bribes each year, according to ongoing research at the World Bank Institute (WBI)…. The $1 trillion figure, calculated using 2001-02 economic data compares with an estimated size of the world economy at that time of just over US$30 trillion….
However, the press release does not provide any link or citation to the underlying research, nor does it describe the methodology employed to produce the $1 trillion estimate. I searched high and low for the actual research paper, but couldn’t find it. This strikes me as problematic. Without being able to see and evaluate the research methods, I’m highly dubious of the claim that we can estimate aggregate annual bribery, an activity which, after all, is almost always secret, usually undetected, and takes place all over the world in amounts that range from the trivial to the gargantuan to everything in between. And I’m also surprised and frustrated that the release announces a point estimate (a single number) rather than a range. (I say this is surprising because one of the best things about the World Bank’s Worldwide Governance Indicators project is the fact that those indicators include confidence intervals to reflect the uncertainty in the underlying data.)
Unless someone can point me to the research supporting the $1 trillion estimate, I’m inclined to say that people should stop referring to it as if it’s anything more than a made-up number, pulled out of thin air. This may seem like an overreaction. After all, I don’t doubt that the World Bank made every effort to come up with an accurate estimate, and also, as I said at the beginning of this post, we’re pretty sure the amount paid each year in bribes is very large, and I doubt anyone would approach this issue any differently if the total amount were $500 billion or $2 trillion or what have you. But if we want to develop rigorous, evidence-based anticorruption strategies, then we need to be rigorous about the evidence we use—all of it.
I agree, Matthew. One of the troubling aspects of using this opaque (and now 13 years out of date!) number is that it obscures the possibility of change over time. Continuing to refer to a number more than a decade old, that apparently nobody has updated, seems to assume that nothing in the world (from economic trends/growth, to modernizing economies, to global and local enforcement efforts) has had an impact on bribery in the last decade.
I think Eden’s point about change over time is really important for measuring if anti-corruption measures have been working, too (in addition to seeing what effects technology, etc. have been having). Additionally, I DO think it would matter if corruption was significantly larger/smaller than a $1 trillion problem. Maybe not on the order of $500M vs. $2T, but I think it would be reasonable to expect big picture policy makers/donors/non-profits to prioritize resource allocation re: big picture problems (compare, e.g., global warming) according to relative costs.
Always a pleasure to read your posts, Matthew. I recently asked myself the same question. You can find a good explanation on “Myths and Realities of Governance and Corruption” written by D. Kaufmann
Click to access 2-1_Governance_and_Corruption_Kaufmann.pdf
In a nutshell, the figure is an extrapolation from firm and household survey data. See the appendix for details.
Great, thanks! I’m reading it now, and will try to post some reactions later this week.
This is an important question to be asking. It also reminds me of a recent book I read on GDP: Diane Coyle’s “GDP: A Brief but Affectionate History.” We tend to accept GDP estimates without questioning how countries calculate this figure. The book noted that many low- and middle-income countries use outdated weights and measures that underestimated their GDP. Sure enough, Nigeria recently updated its calculations and its GDP nearly doubled.
It’s important that we question these catchy corruption estimates as well.