Monday Blognado: Does Size Matter?
Welcome to the first day of Blognado – an experiment where I try to shake myself out of my blogging drought (admittedly I’ve never been all that prolific, but still I’d like to try and get the juices flowing a bit) by writing a blog post each day, just to see if I can. If you have any suggestions as to what I should cover, do let me know.
Today I’m going to riff off a comment I made as an aside in a post last year where I said in passing:
is there a feasible upper a limit to a functional state, given existing information and institutional technology, and if so how big is it? Maybe some countries would be better off breaking themselves up or at least delegating their decisions down a bit so as to avoid clogging up the system. Maybe I should run a regression analysis of population size against the corruption index (probably a decent proxy for quality of governance) some time.
Well, today seems as good a time as any, so I did exactly that, using population data from Wikipedia (my data will be a few months out of date now, but that won’t change things much) and Corruption Perceptions Index data for 2010 (the 2011 results hadn’t been announced when I grabbed the data) from Transparency International.
Now before I get into the results, a couple of extra disclaimers on top of my regular set. I obtained this data from public sources as a private citizen. I analysed the data using software licensed to me personally on my own computer in my own time. Just to be clear – government resources were not used to obtain or analyse this data in any way.
Now, having got that out of the way, here’s what I did (this gets a bit technical, so if you’re not familiar with the ins and outs of regression analysis you might want to skip the green text):
I regressed the corruption Index (a score out of 10 where higher means less corrupt) for each country where I had a population value and a corruption score by the population and a set of dummy variables: 1 for each region defined by Transparency International, except I have collected the 5 Anglosphere countries (USA, Australia, UK, Canada and New Zealand) into their own region. The point of using the regional dummies is to try and correct for the cultural differences in different parts of the world. All things being equal a typical country in sub-Saharan Africa will be more corrupt than a similarly sized country in Western Europe. The dummy variables mean that each region has a different intercept, but the same slope (I did try allowing for different slopes as well, but it turns out the differences in slopes between regions aren’t statistically significant).
I looked at three likely specifications: linear (Corruption index vs. population + the region dummies), quadratic (Corruption index vs. population and population squared + the region dummies), and linear-log (Corruption index vs. natural log of population + the region dummies). Of the three, the linear-log model has the best fit, and a good fit too, with an R-squared of 0.89.
OK, math over, here’s a graph of the relationship between population and corruption index for each region:
You can see a negative relationship between population and score on the corruption index: a 1% increase in population reduces the corruption index score by 0.002 out of 10. The regional differences aren’t all that surprising either: The Anglosphere is the star performer, followed by Western Europe, after a decent gap. After a similar gap you get the Americas, Asia-Pacific and Middle East & North Africa, then finally Sub-Saharan Africa and Eastern Europe in last place.
So we have some preliminary evidence (and it is preliminary, if I were doing this for real, I’d be running a battery of additional tests and checking for other confounds) that the governments of larger countries tend to be more corrupt than the governments of smaller ones. But how important is this effect? Well let’s compare the actual scores of the Anglosphere countries with the fitted scores from the model:
There seems to be a lot going on here aside from the size of the countries. While the best performer (New Zealand) may be the smallest and the worst (USA) may be the largest, there are unanswered questions. For one thing the US and UK seem to do worse than its size would suggest, while New Zealand, Canada and to a lesser extent Australia do better. Less than a quarter of the difference between the US and Canada can be explained by Canada’s smaller size. It gets hard to say more than that with only 5 points of data, but cultural or institutional differences within the Anglosphere are clearly still playing a big role.
So, to go back to the question that originally sparked this digression: How much good does federalism do for the quality of government decision-making? The answer would appear to be some, but not all that much. At the end of the day, centralising government functions may still improve decision-making so long as the new authority has a good institutional framework.
Now ensuring that it has a good institutional framework, that’s the tricky part.
James, good to see you back on the horse. 🙂
As to corruption, I used to do a lot of business in Germany. I met once with a group of scientists from Siemens and after a long and fruitful meeting that dragged on to closing time at the office, I invited them out for dinner and drinks, my treat. They all demurred, telling me that such was verboten given that being friendly with me and my company overmuch would influence their decision (which as we all knew was all but already made). That said I respected their position and bid them Aufwiedersehen. Only later did I stop and think how many times Siemens had been caught bribing foreign companies, governments and individuals. I guess corruption is in the eye of the beholder.Report
Glad you’re back, James. K.
I’m skeptical of these Soros-financed OECD-inspired Euro-orgs making fine gradations when it comes to the US There’s quite a bit of subjectivity in the criteria, and that a Canada or Finland comes out margimally better in the stats is not absolute truth.
I mean, what does “perceived” mean in scientific sense? “Perceived” admits subjectivity.
Hopefully, there’s a wide enough difference between Canada and Hugo Chavez’ Venezuela that even a Euroweinie can tell. And it’s not as though I necessarily disagree—the US includes the City of Chicago, which could swing any measure. [So much for “federalism” and localism, then.]
But I’m not sure there’s enough margin for subjective error in Transparency International’s figures for the civilized world to make your regressions worth computing.
As for the world that includes Chavez and Mugabe and the Kims and the Castros, I would say that it’s easier to commit such madness and tyranny in a smaller country than a bigger one.Report
In my experience the OECD is pretty solid, as is Transparency International, and if they were arugula-eating socialists I doubt theyd have Singapore near the top of their list. Don’t get me wrong, there are some dodgy comparisons out these, but those are mostly produced by activist groups (or occasionally the UN). But I don’t think that’s what we have here.
Yeah, you get that in the social sciences. Things would be much better if it were as easy to measure thing in economics as it is in physics, but we have to deal with the world we have, not the one we want. And ultimately they’re interviewing the people who do business in these countries, so I think they’re doing the best anyone could.
Well they rated Venezuela a 2, not exactly a ringing endorsement. Don’t get me wrong, the US does pretty well by world standards, just poorly vs. the countries most similar to it, and not by a small amount. The US scored 7.1 vs. Canada’s 8.9, that’s a nearly 2 point difference on a 10 point scale. It would take a lot of uncertainty to outweigh a difference that big.
Possibly, but in the 20th Century alone we saw the USSR, China and Germany all produce madness and tyranny which is impressive when you consider that there are more small countries than there are large ones for obvious reasons. Also when a small country goes feral it’s a problem for that country, and maybe its neighbours. When a big country goes feral its’ everyone’s problem. Small might be better from a risk-management perspective.Report
JamesK, I love yr locution of “when a country goes feral.” I think this is the ground zero of yr inquiry.
The rest of my objection—the relative [next to Chavez and Mugabe] quibble of the OECD’s Eurostatist bias, and mucking with the Anglosphere esp the United States of America, to which the entire world owes its current peace and prosperity, I’ll hold with.
http://www.cato.org/pub_display.php?pub_id=13943
I think the OECD’s smug self-justification, what with the looming fiscal and demographic collapse of the Eurostate, needs a bigtime statistical reboot here in 2012.
I think your larger argument about corruption is perhaps key to the problems of the non-Western world. The First World, not so much.
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Have you never heard of Italy? How about Greece?
ROFL! Corruption is rampant…Report
Italy Scores 3.9, Greece 3.5. And those are 2010 figures which predate the current crisis coming to a head. I think Kimmi’s right about that not being incidental to their current problems.Report
Jesus Christ on a pogo stick!
My mind is utterly blown.
The fact that you don’t know about American corruption… Jesus christ!
If I wanted a passport tommorrow, I could do it. That’s about $2k, and a favor from the Secretary of State.
If you want a passport within a week, that’s a hell of a lot cheaper.
Favors are how this American world works. That, and bets.
Some countries are much much less corrupt than us (Scandinavia, for one. Have you heard of the Hanseatic league? Look up how they decided who got to be chief )Report
Bear in mind the surveys they do look at corruption in a country, not the companies in that country (Siemens wasn’t bribing anyone in Germany). Also, note that it’s worth nothing that there are a lot of countries where it’s effectively impossible to do business without bribery. That’s the thing about corruption, it self-perpetuates.Report
James, you’re exactly right. The other part of the problem viz Tom’s objections above is whether we are judging corruption by “our” standards or “theirs”? Americans believe a lot of things are “corrupt” that other countries wouldn’t even bat an eye over. There is that whole Puritan founders mythos to consider. As for not being able to do business in another country without paying the piper, no duh there. Another reason American corporations are headquartered “offshore”. Too bad for Boeing, they are rank amateurs compared to what Airbus gets to do (with France’s blessing). I’m guessing France doesn’t self-report on their national hero corporation however.Report
Transparency International doesn’t have governments self-report on corruption – that would be futile. Instead they survey international businesspeople who operate in each country.Report
Could you run these stats against a list of “the usual suspects” for corruption: i.e. income inequality, military size, financial and banking indices, size of central government, percent of the population that votes, etc.?Report
I don’t have that information to hand unfortunately, and a lot of that data could be hard to obtain for a large number of countries. But if I were doing this as part of a proper study, those are the kinds of variables I’d be investigating.Report
Nice ad for New Zealand, Mr. K. Maybe using their government resources on this would have been justified.
This post gets at a sort of long-standing question I’ve had (but never done any work on myself, not really being a comparativist) about size and governance. Robert Dahl has a classic book on size and democracy, which shows that democracy can work well in large countries as well as smaller ones, but outside some of the public choice literature there’s not a lot–that I’m aware of–on size and competency/effectiveness of governance.
I think potentially a large comprehensive work could be written about the tradeoffs on various dimensions of value that come from differing state sizes.Report
Generally speaking, from a purely general systems standpoint, the bigger you get the more advantages you get from polymorphism, but the less efficient you get from incorrect applications of it.
Stupidly simple example:
You can buy 10,000 10mm hex bolts for cheaper than you can buy 1,000 each of 10 different sizes of bolt. Plus, if everything is a 10mm hex bolt you don’t lose maintenance time looking for wrenches, or digging through piles of different-sized bolts. But somewhere, you’re making something bigger than it needs to be, because you only need a 5mm hex bolt and you’ve made it a 10 in the name of standardization.
When it comes to bolts, this isn’t a big deal. But when it comes to more complicated things, it can become a big, big deal, particularly when you’re talking about command and control systems.
Also, from a general security standpoint: the bigger the pot of advantage you have, the more nefarious actors will gravitate to trying to get access to that pot, and the easier it is to take a bit out of that pot without anyone noticing. So a smaller country has fewer exception scenarios in that case. There’s just not as much in the way of advantage to be gained from corruption, so the scale of it is either smaller in occurrence, or grander in occurrence but much lower in effect (the $10 bribe to avoid getting the $50 license).
Unless you’re talking about military power, because that can be a class break, but that’s an aside.Report
The difficulty in New Zealand’s case is that our superior governance doesn’t translate into higher GDP, out per capita GDP is about 60% of the US.
I think your right about the research potential, you know any good political scientists 😉Report