How Honesty Drain Impoverishes Places Where Rule Abiding is Low

The newly observed phenomenon of "honesty drain" can subtract human capital and economic resources from areas where the tendency to break rules is higher, according to "Rule Breaking, Honesty and Migration", a paper by Massimo Anelli, (Bocconi Department of Social and Political Sciences), Andrea Ichino (European University Institute) and Tommaso Colussi (Catholic University, Milan), published in Journal of Law and Economics.

Honesty drain, the tendency of honest people to migrate from areas where cheating is widespread, also has negative effects on the quality of local politicians and government.

Demographers have documented the phenomenon of false birth registration for a long time across the globe. In Italy, in some localities more than others, some parents of children born in December decide to cheat on their birth certificate. This creates an unnatural decrease in registered births in the last month of the year and an abnormal increase in registrations in the first week of January.

Professor Anelli and his co-authors exploit local variations in registered births as an indicator of honesty. Interestingly, they find that those citizens who migrate from a high-cheating territory are less likely to have a false birth certificate compared to those who remain in their native territory.

Therefore, it appears that honest people are more likely to migrate towards districts with lower cheating. In the long run, this produces changes in the average level of honesty of a territory and is correlated with lower levels of human capital, productivity and earnings growth.

In some Italian districts, especially those who developed important institutional characteristics under the Kingdom of the Two Sicilies, birthday cheating is particularly widespread. One reason could be that under those institutional environments, there is a greater advantage of belonging to a younger cohort. In general, delaying school entry, military service and general emancipation is desirable but the authors cannot determine the specific reasons for this imbalance between North and South. What can be observed is that migrants from the South to the North have significantly lower rates of birthday cheating than those who decided to stay.

However, the degree of honesty loss is remarkably different across localities within the South. In other words, the change in propensity to cheat driven by migration is not homogenous across localities. Some areas have witnessed a severe drain in terms of honesty whereas others have experienced an honesty gain. Thanks to this variation, the authors could study the extent to which a loss in honesty is correlated with a decrease in the quality of political representation and economic performance.



Overall, a decrease in honesty is significantly correlated with a lower quality of the political class. In particular, mayors and other elected officials of a municipality which suffered an extensive honesty drain are also very likely to be chosen among birthday-cheaters. In this regard, if one measures honesty in terms of birthday-cheat, elected officials almost perfectly reflect the honesty of their electorate.

"What is more striking, though," Prof. Anelli concludes, "is that municipalities who suffered a more severe honesty drain are also more likely to be dismissed due to severe wrongdoings such as corruption or even involvement in forms of organized crime. In terms of economic performance, honesty drain correlates with significantly lower scores of earning growth, firm value added and labor productivity."

Massimo Anelli, Tommaso Colussi, Andrea Ichino, "Rule Breaking, Honesty and Migration." The Journal of Law and Economics 2023 66:2, 409-432. DOI: https://dx.doi.org/10.1086%2F723112.

Photo: Emigrants in Ellis Island, 1902. Library of Congress.