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Informal Economic Activity in the Police force: A Comparative Analysis of Transitional and Developing Countries

2011
Department: Laboratory for Sociological Analysis
The project has been carried out as part of the HSE Program of Fundamental Studies.

The object of the study is the police of transition countries (Russia, Kazakhstan, Bulgaria). This report represents the third phase of research on informal economic activities of the police in transformation countries. The purpose of this study is to examine the social mechanisms which regulate the inclusion of police officers in this activity. The empirical base is a questionnaire survey of 1400 police officers in the three mentioned countries. In the course of this study, together with the Laboratory of Experimental and Behavioral Economics at the HSE, the methodology of laboratory experiments was tested and we conducted a series of experiments with police in Russia to analyze characteristics of police culture, and the potential reaction of the police community to anti-corruption policy.

In all three countries we found a considerable amount and variety of informal economic activities, and the largest of its scope were identified in Russia: 36% of police officers, 29% - in Kazakhstan and 25% - in Bulgaria. According to similar surveys in Russia, held in the early and mid-2000s this figure was somewhat higher and ranged between 40-50%.

Although based on purchasing power parity of national currencies, the police in Russia and Bulgaria have almost the same official earnings (in Kazakhstan, they are smaller), but the Bulgarian police are most strongly dissatisfied with their financial situation, and the Russian police are the most happy. That is, total income and satisfaction with material well-being is more dependent on inclusion in informal economic activity than on the official salary.

There is some evidence that in Russia an informal relationship between the police and entrepreneurs in small businesses based on financial payments (bribes during audits, "protection racket") is gradually reduced. They are replaced by relationships, not excluding informal payments, but based mainly on trust and mutual exchange of services (similar to reciprocity). In the informal relations between the Russian police and entrepreneurs there is still a significant disparity in bargaining power in favor of the police officers. However, the trend is that business people have become more powerful in the negotiation process with the police, and policemen are losing their impact on business compared to the late '90s and the beginning of the 2000s.

In Russia, informal relations between businesses and the police are most prevalent, while in Bulgaria they are considerably less wide-spread. Kazakhstan occupies an intermediate position. At the same time, in Russia and Bulgaria, the police increasingly seek to interact with business based on formal rules. In Kazakhstan, the police are more satisfied with the current informal relationship and less willing to change anything.

The vast majority of respondents are dissatisfied with the current system of evaluating the Russian police based on calculations of performance indicators. They believe that this system cannot identify the social impact of their activities. Per our data, about half of the interviewed police officers are explicit supporters of the new system of independent evaluation (on the basis of surveys of public opinion and the involvement of external experts), and about a quarter are opponents.

Experiments with the police and students in Russia carried out in cooperation with the Laboratory of Experimental and Behavioral Economics have focused primarily on polishing the methodology of experimental research on the police. However, they gave interesting meaningful results: the law enforcement community is very heterogeneous in its relation to additional earnings (corruption). It is a group of employees, almost inclined to additional earnings. There are those whose behavior fits the behavior of "rational corrupter" (using the situation when possible to make extra money without risking too much), and there is a group who is slowly getting used to the situation, but then behave in a completely "rational" way in an effort to maximize income. Compared with the police, students, playing the role of the police (the experiments were conducted with HSE students), in general behave more "rationally" in an effort to maximize additional income. In addition, among the police the group effect was much more pronounced. This effect, on the one hand, was expressed in the group of police officers as almost no tendency to corrupt behavior (no such group among the students). In contrast in the police community there was a more pronounced increase in corrupt activity in general as the fight against corruption was reinforced. The obtained results are preliminary and require further testing.