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Improving the behavior of public officials: Changing the method of compensation and changing officials

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  • Charles Knoeber

Abstract

Others have offered a variety of suggestions to improve the behavior of public officials. Each of these involves linking an official's (public) compensation to a measure of his performance. This is costly because performance will necessarily be imperfectly monitored and so public officials will be forced to bear risk. An alternative suggested here is to select the ‘right’ individuals for public office, those whose private interests are linked to the productivity of public officials. The case of a school board member is developed. First, an incentive contract (compensation for effort) for the board member is defined and his behavior characterized. Next the optimal reward for effort is derived. It is then shown that a board member will be more productive (holding constant his public compensation) if he places a high value on better schools and owns property within the school district. If the alternative of choosing the ‘right’ officials is employed to improve performance, actual school board members should have these characteristics. A survey of school board members in Texas indicates not only that board members tend to have these characteristics, but that they believe them to be necessary qualifications for the office. Copyright Martinus Nijhoff Publishers 1982

Suggested Citation

  • Charles Knoeber, 1982. "Improving the behavior of public officials: Changing the method of compensation and changing officials," Public Choice, Springer, vol. 38(1), pages 21-33, March.
    • Handle: RePEc:kap:pubcho:v:38:y:1982:i:1:p:21-33
    DOI: 10.1007/BF00124626
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    References listed on IDEAS

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    1. Uri Ben-Zion & Menahem Spiegel, 1980. "Efficiency and compensation of public officials," Public Choice, Springer, vol. 35(1), pages 85-95, January.
    2. Lindsay, Cotton M, 1976. "A Theory of Government Enterprise," Journal of Political Economy, University of Chicago Press, vol. 84(5), pages 1061-1077, October.
    3. Gary S. Becker & George J. Stigler, 1974. "Law Enforcement, Malfeasance, and Compensation of Enforcers," The Journal of Legal Studies, University of Chicago Press, vol. 3(1), pages 1-18, January.
    4. Robert Barro, 1973. "The control of politicians: An economic model," Public Choice, Springer, vol. 14(1), pages 19-42, March.
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    2. Qi, Yu & Yu, Jinliang & Yang, Shubo & Xie, Xiaoyi, 2022. "Local government consumption and firm performance: Evidence from the "TPCs" in China," Journal of Asian Economics, Elsevier, vol. 80(C).

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