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An Analysis of Corruption in Russia: Based on Evidence from License Plates

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AN ANALYSIS OF CORRUPTION IN RUSSIA: BASED ON EVIDENCE FROM LICENSE PLATES Aantal woorden: 16409 Tom Eeckhout Stamnummer : 01100232 Promotor: Prof. dr. Koen Schoors Masterproef voorgedragen tot het bekomen van de graad van: Master of Science in de Economische Wetenschappen Academiejaar: 2016 - 2017 AN ANALYSIS OF CORRUPTION IN RUSSIA: BASED ON EVIDENCE FROM LICENSE PLATES Aantal woorden: 16409 Tom Eeckhout Stamnummer : 01100232 Promotor: Prof. dr. Koen Schoors Masterproef voorgedragen tot het bekomen van de graad van: Master of Science in de Economische Wetenschappen Academiejaar: 2016 - 2017 VERTROUWELIJKHEIDSCLAUSULE/ CONFIDENTIALITY AGREEMENT PERMISSION Ondergetekende verklaart dat de inhoud van deze masterproef mag geraadpleegd en/of gereproduceerd worden, mits bronvermelding. I declare that the content of this Master’s Dissertation may be consulted and/or reproduced, provided that the source is referenced. Naam student/name student :……………………………………………………………………………………………… Handtekening/signature Samenvatting Gepersonaliseerde nummerplaten zijn in Rusland officieel niet te verkrijgen. Het is echter een publiek geheim dat deze platen in ruil voor de juiste som roebels te koop zijn. We kunnen deze omkoping aantonen dankzij de beschikbaarheid van een administratieve databank. De auto eigenaar is niet zomaar in een bijzondere plaat geïnteresseerd, ze vervult een vermogens- signaal of illustreert de bijzondere connecties van de eigenaar met de machthebbers. De persona- liseerde nummerplaten volgen de standaard structuur maar bestaan uit bijzondere letter- of cijfer- combinaties. Hierdoor is de verdeling van letter- en cijfercombinaties over de auto’s niet conform een willekeurige verdeling van de nummerplaten. Op basis van een theoretisch model voorspellen we dat deze bijzondere platen gecombineerd worden met luxueuze auto’s. De basis voor deze com- plementariteit ligt in de signalen die deze nummerplaten moeten versturen. Wanneer bijzondere platen ook op een toevallige manier, dus zonder omkoopsom, verkregen kunnen worden, dan ver- mindert dat namelijk de sterkte van het signaal dat zo’n plaat geeft over de eignaar. Wanneer dan een goedkope auto met een bijzondere plaat gecombineerd wordt zal de buitenwereld de bijzondere plaat zien als een toevalligheid. Om het fenomeen te kunnen onderzoeken en te testen dienen we de 2 belangrijkste concepten af te bakenen. Welke auto’s kwalificeren als luxe auto’s; en welke nummerplaten zijn bijzonder? De groep van bijzondere nummerplaten bestaat uit platen, met cijfer- of nummercombinaties die een sterk verhoogd gemiddeld motor vermogen hebben t.o.v. hun theoretische verwachting. Voor de luxe auto’s gebruiken we een officiële lijst van de Russische overheid, een selectie op basis van auto klasse segmenten en een selectie op basis van de verdeling van bijzondere platen over automerken. Deze laatste aanpak gebruikt expliciet de gekozen groep van bijzondere nummerplaten. We testen voor het bestaan van deze bijzondere platen op basis van t-testen en regressies. De t-testen vergelijken de frequentie van bijzondere platen met hun theoretische verwachting. Daarna herhalen we deze test voor de groep van luxe auto’s. Beide testen tonen aan dat nummerplaten niet willekeurig verdeeld worden, en dat de bijzondere nummerplaten vaker voorkomen bij luxe auto’s. Ook een reeks regressies van de nummerplaat variabele op de luxe auto variabele, bevestigen ons model en verwerpen de nulhypotehese van afwezigheid van corruptie. Ten slotte illustreren we regionale verschillen, verschillen voor geboortejaren en een tijdstrend van deze corruptie. i CONTENTS CONTENTS Contents 1 Introduction 1 2 Data and Model 3 2.1 Data description . .3 2.2 Model and hypotheses . .3 2.3 Constructing the key variables . .9 2.3.1 Vanity plate dummy . .9 2.3.2 Luxury vehicle dummy . 18 3 Results 27 3.1 Frequency in the general population . 28 3.2 Frequency in the luxury vehicle subpopulation . 28 3.3 Regressing vanity on luxury . 32 3.4 Government agencies . 33 4 Further Investigation 39 4.1 Regional differences . 39 4.1.1 Region . 43 4.1.2 Region of birth . 44 4.1.3 Assessing the regional corruption measurements . 44 4.2 Time trend . 47 4.3 Year of birth . 49 4.4 Other features . 51 ii LIST OF FIGURES LIST OF FIGURES 4.4.1 Regional differences in Moscow . 51 4.4.2 Vanity plates as immunity to traffic stop . 51 5 Conclusion 52 6 References 53 A Selected letters for lvan1 II B Selected letters for lvan2 III C Selected letters for lvan3 V D Classes in the nocar category VII E Brands in the lux1 category VIII F Corruption ranks: regions IX G Corruption ranks: regions of birth XIV List of Figures 1 Luxury in function of resource . .6 2 Density plots of numcount for number and numdum . 13 3 Density plots of lcount for l and ldum . 15 4 Bar chart of nvan1 by class . 31 5 Bar chart of lvan2 by class . 31 6 Bar chart of lvan3 by class . 32 iii LIST OF TABLES LIST OF TABLES 7 Regional variation in corruption: frequency for region . 43 8 Regional variation in corruption: coefficient for region . 44 9 Regional variation in corruption: frequency for region of birth . 45 10 Regional variation in corruption: coefficient for region of birth . 45 11 Density of registrations by year . 48 12 Time trend of vanity plates . 49 13 Density of registrations by year of birth . 50 14 Comparison of vanity plates over year of birth . 50 15 Comparison of vanity plates over year of birth: zoomed in on 1928-1988 . 51 List of Tables 1 Other types of license plates . 10 2 Types of license plates . 10 3 Reserved letter combinations . 11 4 Summary statistics: count of numdum . 12 5 Summary statistics: count of number . 12 6 Summary statistics: medpower (number) . 12 7 Summary statistics: medpower (numdum) . 12 8 List of numbers with high median power . 14 9 Summary statistics: count of ldum . 15 10 Summary statistics: count of l . 15 11 Summary statistics: medpower (l) . 16 12 Summary statistics: medpower (ldum) . 16 iv LIST OF TABLES LIST OF TABLES 13 Summary statistics: medpower (l), excluding nocar . 16 14 Summary statistics: medpower (ldum), excluding nocar . 17 15 Euro Market Segment . 19 16 Russian number system: passenger car classes . 19 17 Composition of carpopulation in the data . 20 18 Ttest for nvan1 by brand . 21 19 Top-brands by nvan1 . 25 20 Summary statistics: van . 26 21 Summary statistics: lux . 26 22 Correlation matrix for vanity variables . 26 23 Correlation matrix for luxury variables . 27 24 Ttests for vanity frequency in general population . 28 25 Ttests for vanity frequency in luxury car subpopulation: lux1 . 29 26 Ttests for vanity frequency in luxury car subpopulation: lux2 . 29 27 Ttests for vanity frequency in luxury car subpopulation: lux3 . 30 28 Ttests for vanity frequency in luxury car subpopulation: lux4 . 30 29 Ttests for vanity frequency in luxury car subpopulation: lux5 . 30 30 Ttests for vanity frequency in luxury car subpopulation: lux6 . 30 31 Regression of nvan1 on luxury variables . 34 32 Regression of lvan1 on luxury variables . 35 33 Regression of lvan2 on luxury variables . 36 34 Regression of lvan3 on luxury variables . 37 35 Government agencies . 39 v LIST OF TABLES LIST OF TABLES 36 Regression of nvan1 on luxury variables: government agencies . 40 37 Regression of nvan1 on gov1-gov9 . 41 38 Correlation matrix of different corruption measures on the federal level and WVS variables . 47 39 Correlation matrix of different corruption ranks on the regional level, the CPI and regional GDP per capita and growth . 48 40 Letters in lvan1 . II 41 Letters in lvan2 . III 42 Letters in lvan3 . .V 43 Nocar classes . VII 44 Brands in lux1 . VIII 45 Rank of regions: frequency . .IX 46 Rank of regions: coefficient . .XI 47 Rank of regions of birth: frequency . XIV 48 Rank of regions of birth: coeffecient . XVI vi LIST OF TABLES LIST OF TABLES Abstract This thesis exploits an administrative database to look for evidence of corruption within the Russian traffic police. It studies the vanity plate phenomenon. By building a theoretical model that predicts a strong population correlation between vanity plates and luxury cars, we provide tests for the existence of the corruption. These tests confirm the existence of this corruption. Potential topics for further research are also highlighted: differences in our corruption measures for different years of registration, years of birth, region of birth and region of registration. vii LIST OF TABLES LIST OF TABLES viii 1 INTRODUCTION 1 Introduction Vanity plates are a well known phenomenon in a large part of the world. These personalized license plates most often consist of a combination of letters and/or numbers that have a certain value for the owner. Being more expensive.
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