Paper The Response of the LAPD to Increased Oversight

Public officials are rarely offered the kinds of pay-for-performance mechanisms that pervade the agency theory literature. Instead, the primary way of overseeing their behavior is by investigating the details of the cases that they handle, where their careers may be affected by the quality of their decisions. But this type of oversight is rarely random: instead, agencies typically look for signs of error (police brutality, medical malpractice, racism by immigation officials, etc.) before they intervene. To get such relevant information, institutions often rely on the information of consumers to identify if their employees are performing adequately. (For instance, most public agencies have complaints procedures which the public can use.) But consumers are typically not disinterested parties, and in many public sector settings, they often have opposed interests to the institution. For example, suspects in criminal cases and potential immigrants often have very different interests to society. This is because many goods allocated by the public sector are benefits (citizenship, unemployment insurance, and so on), which consumers would like to receive even if not warranted. This implies that consumers are often unwilling to point out known errors. For example, guilty suspects have no reason to point out a police officer’s error in not arresting him, nor do unqualified immigrants own up when incorrectly allowed into the country. Agency problems then arises for two reasons. First, if a consumer is mistakenly given rents, he will not complain. This implies that bureaucratic investigations are less precisely focused because consumers cannot be trusted to reveal that an error has been made. My main interest below is in a second problem, namely, the harmful incentives that this asymmetry implies. Bureaucrats are well aware that their performance is under the spotlight when complaints are made against them. Not surprisingly, this means that from the bureaucrat’s perspective, “all that matters is that there are not ‘too many’ complaints” (Wilson, p.175). This implies that she has an incentive to give customers what they want, even when it is not socially efficient, simply to avoid the possibility of a complaint. For example, a police officer could choose not to arrest someone to avoid the possibility of a wrongful arrest complaint or the possibility that she has used excessive force. This is the subject of the data below. Similarly, an INS official could allow an unqualified candidate to enter the country rather than avoid the type of cases reported in the media in the US where officials were accused of racism. Finally, there has been a recent increase in oversight of the IRS, which has resulted in “a sharp roll-off in tax investigations as auditors, fearing for their bureaucratic lives, proceed timidly..[as]..tax collectors are too worried about their jobs to be aggressive” (Star Tribune, 2000).

Get the Working Paper

• Authored by Canice Prendergast
• 2002