Is corruption merely a flaw of character, or is it more fundamentally related to the institutional environment? Scholars from various disciplines mainly side with the narrative that, ultimately, corruption is a problem of character flaws. Policy prescriptions around the world are designed based on this understanding. In this essay, I challenge this understanding, arguing that it is at best incomplete, and misleading at worst. I argue that we should focus instead on three aspects of how the prevalence of virtuous acts is profoundly tied to people’s institutional environment and the incentive structure that derives from it. First, I observe that there is a difference between virtue and acting virtuously, and that even with the aid of moral education and coercion, virtue itself is hard to come by. Second, I discuss how formal institutions and social norms influence people’s propensity to perform virtuous acts rather than engage in corruption. Finally, I explore how institutions that increase the transaction costs associated with everyday life also increase the prevalence of corruption. Based on these three explorations I derive some public policy guidelines that, if followed, might increase the probability of success of anticorruption programs.
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