Public Resources and Accountability: Experimental Evidence

Abstract

Recent political economy research indicates that the well-known positive relationship between taxation and accountability may be driven not by the source of revenues per se but by citizens’ expectations regarding how they will be used. Two mechanisms have been proposed: information and ownership. We leverage both observational and experimental data to further test these mechanisms and their interaction in a realworld policy setting. In particular, we field a comprehensive survey experiment in carefully selected Peruvian districts that benefit from mining fees. The experiment manipulates the source of revenues (local taxes vs mining fees), as well as ownership over these revenues, while keeping the size of the budget constant. We find that it is easier to manipulate ownership over taxes than windfalls, and that low levels of tax awareness hinder ownership over tax revenues. Nonetheless, our findings indicate that increasing ownership over tax revenues does motivate people to monitor the use of the budget but has no effect on immediate behaviors. Contrary to expectations, we also find that respondents are more likely to demand particularistic goods when the budget is perceived to come from taxes than when it comes from windfalls. Finally, the information and ownership mechanisms are found to act as complements.