Motivating Bureaucrats: Autonomy vs Performance Pay for Public Procurement in Pakistan

2015-07-01

2016-06-30

Our main outcome variables are twofold.
1-Quality-adjusted prices paid
2-Quality, quantity and price discrepancies between products procured as self-reported and as revealed through audit.

Quality adjusted prices will be constructed from extremely detailed data on the goods being purchased, with a focus on “generic” goods where quality can be determined by using a relatively small number of attributes of a good. With this detailed data, we can adjust prices paid for the quality of the goods purchased to uncover differences in the prices different procurement officers pay for the same good. We are collecting this data through an online portal, the Punjab Online Procurement System (POPS), designed and maintained by us, into which procurement officers enter the full set of details of every purchase of a generic good they make.

Drawing and Disbursing Officers (the government officers legally responsible for public procurement) are randomly allocated to 1 of 5 treatments, stratifying by district and by line department (Health, Higher Education, Communication & Works, Agriculture). Treatment arm 1: Financial bonuses for good procurement performance; data collected through POPS. Treatment arm 2: Increased discretion for bureaucrats; data collected through POPS. Treatment arm 3: Combined treatments 1 & 2. Treatment arm 4: Control group; data collected through POPS. Treatment arm 5: Pure control group; data not collected through POPS, but through field visits.

Computer program

Drawing and Disbursing Officer (the bureaucrat with the legal responsibility and authority for conducting public procurement)

Yes

1074 Drawing and Disbursing Officers (DDOs)

Approx 1074*50=53,700

202 in Incentive payment arm
203 in Discretion arm
228 in Combined treatments arm
320 in Control group
121 in Pure Control group

Using Bloom's (2005) expression for the MDE, our estimate of the intracluster correlation from baseline data of 0.067, and an estimate of an average of 75 observations per bureaucrat, we estimate that a sample of 572 bureaucrats, or 42,882 observations, will allow us to detect a 5% effect with 95% probability.

Pre-Analysis Plan

Survey Instrument

We design a field experiment to study how the allocation of authority between frontline procurement officers and their monitors affects performance both directly and through the response to incentives. In collaboration with the government of Punjab, Pakistan, we shift authority from monitors to procurement officers and introduce financial incentives to a sample of 600 procurement officers in 26 districts. We find that autonomy alone reduces prices by 9% without reducing quality and that the effect is stronger when the monitor tends to delay approvals for purchases until the end of the fiscal year. In contrast, the effect of performance pay is muted, except when agents face a monitor who does not delay approvals. Time use data reveal agents' responses vary along the same margin: autonomy increases the time devoted to procurement and this leads to lower prices only when monitors cause delays. By contrast, incentives work when monitors do not cause delays. The results illustrate that organizational design and anti-corruption policies must balance agency issues at different levels of the hierarchy.

Bandiera, Oriana, Michael Carlos Best, Adnan Qadir Khan and Andrea Prat, The Allocation of Authority in Organizations: A Field Experiment with Bureaucrats, Working Paper: Columbia University

https://blogs.cuit.columbia.edu/mcb2270/files/2021/01/BBKP_AuthorityOrganizations_Jan21.pdf