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Deputization

Author

Listed:
  • Bruce I. Carlin
  • Tarik Umar
  • Hanyi Yi

Abstract

A policy of deputization asks agents to monitor others without providing explicit incentives. It is often used to prevent dangerous activities. To calibrate whether and why it works, we study recent laws that deputized financial professionals to help fight elder financial abuse. We show deputization led to a 4%-6% decrease in suspected cases and a 4.5% drop in personal bankruptcies. Women, minorities, and unmarried people benefited more. Effectiveness operated through higher community-mindedness and deeper social connections. Egoistic incentives, legal concerns, publicity, and religiosity were less important. This suggests that regulators can rely on social networks to solve tough problems.

Suggested Citation

  • Bruce I. Carlin & Tarik Umar & Hanyi Yi, 2020. "Deputization," NBER Working Papers 27225, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:27225
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    More about this item

    JEL classification:

    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law

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