Money versus Kudos: The impact of incentivizing local politicians in India

Abstract

We present experimental evidence on the efficacy of a performance-based incentive in motivating elected politicians to improve delivery of a large-scale public program in India. The study randomly assigned presidents of village governments in the state of Tamil Nadu to one of two incentive schemes (or a control group): a financial incentive that rewarded better performing presidents with a higher public budget, and a nonfinancial incentive that awarded them a certificate demonstrating their achievement with an information campaign to disseminate it. The findings show that both incentives improved performance on multiple program dimensions, including expanding access to various safety net and public assistance schemes in the villages of incentivized presidents. The nonfinancial incentive also reduced between–hamlet differences in public resources allocated by presidents within their village, and it was significantly less costly to implement compared to the financial incentive. The results are also in line with standard voting models with imperfect information, where interventions that provide credible information on politician quality can help redress preferential targeting of resources that are prevalent in the status quo.