Oil Windfalls, Taxation, and Demand for Government Accountability

Alexander James and Dilek Uz

No 2022-02, Working Papers from University of Alaska Anchorage, Department of Economics

Abstract: What determines demand for government accountability? According to the theory of the rentier state, taxation engages an otherwise acquiescent electorate and increases demand for public transparency, accountability, and fiscal efficiency. This paper tests this theory using an online survey-experiment administered in the United States in which subjects are randomly assigned to one of five informational treatments describing the waste or embezzlement of income or oil-tax revenue. We then assess subject demand for accountability. Several insights emerge. First, intentions matter; embezzlement is punished more severely than incompetence. Second, income-tax embezzlement is punished more severely than oil-tax embezzlement, but only among high-income earners. Third, there is weak evidence that patronage (in the form of an oil-financed tax cut) reduces demand for accountability. Considered jointly, these results suggest an interesting Catch-22 in which a lack of taxation causes government waste and corruption, which is often then used to justify opposition to taxation.

Keywords: Rentier States; Public Finance; Voter Apathy; Political Resource Curse; Survey Experiment (search for similar items in EconPapers)
JEL-codes: D72 H71 Q32 Q38 (search for similar items in EconPapers)
Date: 2022-10
New Economics Papers: this item is included in nep-ene, nep-exp and nep-pub
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