Streetwise Professor

January 7, 2010

High Powered Incentives from Hell, or Russia–Pick ’em

Filed under: Economics,Politics,Russia — The Professor @ 10:56 am

There is an extensive economic literature that demonstrates that high powered incentives, like piece rates (as opposed to low powered incentives like hourly wages) can have extremely perverse effects in the presence of information asymmetries, or non-verifiability/non-contractibility.  And it doesn’t get much more perverse than this (along with a free bonus illustration of the ratchet effect!):

There was an old Soviet joke about how central planners decided to reward factories based on how many nails they produced. So the plants naturally began producing copious quantities of miniscule nails. So planners began measuring output by weight, and the factories promptly started producing small numbers of enormous nails.

A similar problem is currently bedeviling efforts to reform the Russian Interior Ministry, as a recent article in makes vividly clear. The site spoke candidly with a police officer identified only as Sergei, who described in detail how the ministry’s insistence on tallying up “solved” crimes motivates officers to commit the most heinous acts.

Sergei describes how ambitious officers boost their statistics (in order to secure bonuses, promotions, or choice assignments from superiors who can recognize a person who will “do whatever is necessary” when they see him) by setting up unsuspecting people, usually by giving them a few drinks and then convincing them to commit a crime to help their new drinking buddy. The drinking buddy, of course, disappears in the confusion surrounding the arrest and if the scam target mentions him, police shut him up just by threatening to charge him with “organizing a criminal gang.”

. . . .

Alternatively, Sergei says, police can rack up a lot of brownie points by “paving the way” for a known drug dealer and just arresting his customers one after another.

He also describes how the end-of-the-month reckoning at the police station leads to a lively market in which officers who have exceeded their quotas (the most viciously corrupted) sell or trade their extra “solved” crimes to less-fortunate officers (the ones who wasted the whole month pursuing real criminals or keeping the public safe).

Sergei says the heart of the problem is that the ministry is completely infused with a culture of statistics, particularly statistics that show ever-increasing figures for “solved crimes.” The entire ministry and individual departments, precincts, and officers live in terror of the dreaded “analogous period from last year” (known by insiders by the Russian acronym APPG). It is, Sergei says, “the root of all evil” in the force.

He says that an officer who solved 40 crimes last year is simply obligated to solve at least 41 this year. And he compared it to a journalist who covers five terrorist attacks in one year and is informed by his editor that he must cover at least six this year. He describes how every unit in the ministry must account for itself on a quarterly basis and how when the third-quarter report is submitted in October, the pressure begins to solve all the “open” cases and to bring up the current levels to the needed APPG levels before the end of the year.

Comparing the situation to Soviet times, Sergei says back then police were judged only on the percentage of solved crimes and they regularly achieved rates above 90 percent largely by not registering many crimes that actually occurred (this practice made the country look good and pleased Communist Party officials).

After the collapse of the Soviet Union, the ministry “reformed” this system by instilling deep incentives to “solve” as many crimes as possible (and the nefarious one-two punch of police and prosecutors in Russia made this easier than it otherwise would have been). He points out that all police – even patrol cops – have to live up to the APPG quotas, even for administrative offenses like “fighting.”

The article closes with this telling quote, which could serve as a credo for Putinism*:

His final assessment reminds me of another old joke, about the man who complained that the food on the airplane was terrible and there wasn’t enough of it. “Our system is bad,” Sergei says. “But it is strong and resilient.”

Good luck with that whole reform thing, Dmitri.

*I was going to write “serve as an epitaph for Putinism,” but sadly, that would be unwarrantedly optimistic.

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  1. The police behave like this, and worse, and yet the maniac Russophile set goes on imagining it can rely on data generated by the Russian government. Given Russia’s status as one of the most perversely corrupt nations on the planet as documented repeatedly by various independent scholars, the very notion that any data spewed out by the Kremlin is worth the cheap, inferior Russian paper it is printed on is utterly laughable.

    Comment by La Russophobe — January 7, 2010 @ 3:19 pm

  2. “Cheap, inferior Russian paper”; “independent scholars”; “the maniac Russophile”… no wonder even Robert Amsterdam must offer a disclaimer when he mentions your name, LaRussophobe…

    Comment by Leos Tomicek — January 7, 2010 @ 3:27 pm

  3. Umm, Mr. Moron? Amsterdam apologized in public for that remark and OFTEN links to our blog. Your illiteracy is shameful, and your need to attack personally makes you out a flaming hypocrite when you purport to decry our comment. Gosh, you’d dumb.

    And then again, he doesn’t mention YOUR name AT ALL, now does he? Gosh, whyever could that be . . .

    Do you consider Transparency International to be dependent? Upon whom? Have you ever writtn on Russian paper? We have. Even visted Russia? We doubt it. Your utter lack of any type of sustantive response indicates we’ve struck a nerve and you can reply only with childlish babble. That’s pretty pathetic.

    Comment by La Russophobe — January 7, 2010 @ 3:52 pm

  4. I know it hurts Your Majesty but would You be so kind and provide me with a link to that public apology You speak of? Also, I would humbly like to inform Your Majesty that I am half Russian and visit my relatives in Russia regularly. I should point out that, unlike Your Majesty, I am fluent in the language of that land. Never have I experienced such technological inferiority Your Majesty speaks of. With no knowledge of the Russian tongue and exposed to such savagery it is a miracle Your Majesty is here with us today.

    Sir Robert might be licking Your Majesty’s rectum on occasions, which is nothing he should take pride in. Your Majesty would do well not to make unsubstantiated connections. I feel saddened that Your Majesty didn’t realize that I was especially pointing out Her literary style which I believe contains hyperbolic and yellow press styled phrases.

    I also feel saddened that Your Majesty would take my minor comment personally and burst into such uncontrollable rage and anger and that She would not find a shred of humility and avoid senselessly pointing out Her grandeur where there isn’t any.

    Signed, Sir Leos

    Comment by Leos Tomicek — January 7, 2010 @ 5:38 pm

  5. Sir Leos, it was actually Sir James who “apologized” – in a cowardly and hypocritical response to Her Majesty La Russophobe’s blackmail, may I add – to satisfy Her egomaniac delusions of grandeur.

    Comment by Sublime Oblivion — January 7, 2010 @ 6:26 pm

  6. Systems can be gamed. Who would’ve thought!

    Comment by So? — January 7, 2010 @ 6:55 pm

  7. So?- I think that you are decidedly lacking in the affect department. Very disturbing. Moreover, systems differ in their susceptibility to being gamed, and a major objective of crafting organizations and institutions is to mitigate the perverse effects of this gaming. The cavalier attitude that you, and evidently many in authority in Russia, take towards the human toll that results from such a palpably dysfunctional “law” “enforcement” system speaks volumes. It’s a big part of the reason why Russia remains on that hamster wheel from hell.

    The ProfessorComment by The Professor — January 7, 2010 @ 10:01 pm

  8. Law enforcement in the USSR was an order of magnitude better. Most of those good old cops have long since retired. What has risen to the top is not cream. Sometimes a system needs a good kick. A big existential crisis separates the men from the boys, binds the people together. Otherwise, the rot will not stop. The US may have a better system, and is starting from a higher level, but the overall trend is undeniably down. Entropy and all that.

    Comment by So? — January 7, 2010 @ 10:40 pm

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