AMERICAN & COMPARATIVE POLITICAL BEHAVIOR WORKSHOP
Abstract: Screening requirements are common features of fraud and corruption mitigation efforts around the world. Yet imposing these requirements involves trade-offs between higher administrative costs, delayed benefits, and exclusion of genuine beneficiaries on one hand and lower fraud on the other. We examine these trade-offs in one of the largest economic relief programs in US history: the Paycheck Protection Program (PPP). Employing a database that includes nearly 11.5 million PPP loans, we assess the impact of screening by exploiting temporal variation in the documentation standards applied to loan applications for loans of different values. We find that screening significantly reduced the incidence and magnitude of various measures of loan irregularities that are indicative of fraud. Moreover, our analysis reveals that a subset of borrowers with a checkered history strategically reduced their loan application amounts in order to avoid being subjected to screening. Borrowers without a checkered history engaged in this behavior at a much lower rate, implying that the documentation requirement reduced fraud without imposing an undue administrative burden on legitimate firms. All told, our estimates imply that screening led to a reduction in losses due to fraud equal to at least $744 million.
Daniel W. Gingerich is Professor of Politics specializing in comparative politics and Director of Quantitative Collaborative at the University of Virginia. He also recently served as Co-Director of the CLEAR lab, the University of Virginia’s Corruption Laboratory for Ethics, Accountability, and the Rule of Law (2018-2022). Gingerich’s research focuses on the factors that make democracies more or less successful in providing public goods to their citizens. To that end, his scholarship concentrates on understanding the causes and consequences of phenomena such as corruption and clientelism, especially as relates to the historical experience of Latin America. He has published articles in journals such as the American Political Science Review, the American Journal of Political Science, World Politics, Political Analysis, Comparative Political Studies, along with many others. He is the author of Political Institutions and Party-Directed Corruption in South America: Stealing for the Team (Cambridge University Press, 2013). Gingerich’s scholarship was recently awarded the 2021 Luebbert Award for Best Article in Comparative Politics (APSA) and the 2022 Kellogg/Notre Dame Award for Best Paper in Comparative Politics (MPSA). During the 2012-2013 academic year, he was a Visiting Scholar in the Research Department of the Inter-American Development Bank in Washington, DC.
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The series is sponsored by the ISPS Center for the Study of American Politics and The Whitney and Betty MacMillan Center for International and Area Studies at Yale with support from the Edward J. and Dorothy Clarke Kempf Fund.