Ideas

Does money buy better politicians?

Boston’s City Councilors wants to give themselves a raise — and some experts say they’ve got the right idea

Emily Theis for the Boston Globe

On Monday, Sept. 29, the Boston City Council is scheduled to discuss a bit of delicate business. On the docket: a reassessment of their cash value to taxpayers, a.k.a. their own salaries. Council president Bill Linehan and his allies on this issue are, essentially, asking themselves for a 29 percent raise, a move that comes off as so purely self-interested as to be politically radioactive. “It’s an awful position to be put in,” Linehan told the Globe, of voting on his own compensation.

Council members supporting the wage hike have pointed out that, unlike other municipal workers, they haven’t seen a raise in eight years, and that their counterparts in other major cities make significantly more. In Washington, D.C., for instance, city councilors take home $125,583; in Boston, a city almost exactly the same size, they get just $87,500.

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Voters may be understandably wary of a raise request from a group that sets its own pay. And the Boston City Council, widely seen as a weak and not terribly influential body compared to the mayor’s office, is hard to take seriously as a needy cause. The State Ethics Commission as well as the mayor’s office are looking into whether it violates conflict-of-interest laws.

If the whole affair sounds like a purely local kerfuffle—just another attempt by city pols to line their own pockets—it’s anything but. Whether they know it or not, Linehan and the council have waded into a genuinely unresolved global debate about how much citizens in a democracy should pay their leaders. There are serious arguments that we don’t pay our public officials nearly enough—that higher salaries, perhaps much higher, will bring better and more talented candidates into politics.

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Some of the evidence suggests that you do get what you pay for, and that better-paid politicians are more productive at passing legislation and more attentive to their constituents. But the picture has revealed itself to be rather murky: Just last year, two separate studies—one of them looking at historical data on the United States—found that higher salaries did not make for better politicians, or motivate elected officials to work significantly harder.

This is not just a question being debated in the ivory tower. Singapore, until not long ago, paid its prime minister more than 2 million US dollars per year, part of an apparently successful effort to reduce corruption and attract bright, highly educated managers to politics instead of business. Members of the state Legislature of New Hampshire, meanwhile, all make a token $200 per term—no more than an honorarium for being part of a citizen chamber.

These compensation schemes reflect two fundamentally opposed philosophies: Should public service pay richly to reflect the value of the work, or modestly to draw people who consider service its own reward? Figuring that out requires that we reexamine what elected officials really do for us, and the complicated way that money affects people’s incentives to do their jobs. It also forces us to consider the strange proposition that, as much frustration as Americans often feel toward our elected officials, we might paradoxically improve our lot by showering them with money—in effect, springing for the best politicians money can buy.

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If the City Council is looking for an encouraging model, it might turn back the clock to 1994, when the leaders of Singapore released a report entitled “Competitive Salaries for Competent and Honest Government” that called for pegging the compensation of politicians to what they could be making in the private sector. The new system made millionaires of many of Singapore’s top public servants. This, according to the prime minister at the time, was the price of “good government.”

The premise of the Singapore experiment was straightforward, and based in the simplest of economic rules: If you offer more money, you can expect to get better stuff in return. When you pay people higher wages, they’re less tempted by, ahem, outside revenue streams—and you may get superior performance in general, since people work harder when they want to keep their jobs.

Does it work? Singapore’s example suggests it does. According to Transparency International, an organization that monitors corruption around the world, surveys show that the people of Singapore perceive their government to be supremely honest—much more so than Americans perceive theirs. And along a number of other metrics, including economic competitiveness and education, the country is notably well managed.

But Singapore is an unusual place—a tiny, authoritarian city-state—and it’s far from obvious that its approach would work elsewhere. Still, the two most frequently cited academic studies on politician pay, one focused on Italy, the other on Brazil, both indicate that increasing the wages of elected officials can have real benefits.

The first of theses studies was conducted by a pair of Italian economists who examined the salaries of Italian mayors. Stefano Gagliarducci and Tommaso Nannicini found that higher wages attracted more candidates with white-collar backgrounds, which meant they had put in more time at school and were considered high skilled. They also found that mayors with better salaries were more likely to reduce the size of government and to make it run more efficiently.

Similar findings had appeared in a 2008 working paper by Claudio Ferraz from PUC-Rio in Brazil and Frederico Finan from University of California Berkeley. The two economists had been working together on how to ensure good government, and wanted to measure the effects of money. As it happened, Brazil had amended its constitution in a way that had turned the 2004 election into a kind of experiment: The salaries of the country’s local politicians would change, leaving some of them much better off than others. Ferraz and Finan tracked everyone who ran for municipal government that year—taking note of their education level, their profession, and their wealth—and then watched what the winning candidates did in office.

When the researchers crunched the data, the results were a testament to the power of the dollar (or, at least, the Brazilian real). The politicians with higher pay passed more bills. They were better at bringing in resources for their constituents, which meant more health clinics, more doctors, more schools with computer labs. They also tended to be better educated and more experienced.

So maybe the Boston City Council should get even more than they’re asking for? Not so fast. The picture became more complicated last year, when Columbia Business School economist Raymond Fisman, studying members of the European Parliament, found that in countries where politicians received a pay hike, elected officials were subsequently less likely to come from high-ranked universities. Furthermore, officials who got raises did not become more productive, in terms of passing bills, or more likely to show up to roll call votes. According to Fisman, it might be a case of extrinsic rewards (cold hard cash) “crowding out” intrinsic ones (the moral imperative to serve the people). Higher pay, Fisman concluded, doesn’t necessarily attract better candidates, but it does attract some who wouldn’t have run for office were it not for the promise of a generous salary.

Then there’s another tricky point, related to something economists call a “multitasking problem”: Politicians do a whole bunch of different things, and it’s not clear that salary will affect each aspect of their job performance the same way. This was the takeaway from a paper by Mitchell Hoffman at the University of Toronto and Elizabeth Lyons at the University of California San Diego, who looked at the salaries of state legislators and governors in the United States over the past 60 years. What they saw was that a higher salary had only a very modest effect on the competitiveness of elections, political corruption, and fiscal policy, but had a relatively strong positive association with how much of their time politicians spent on fund-raising for reelection.

The more money elected officials were earning, it seemed, the more invested they were in keeping their seats. And while the higher wages was also associated with something positive—spending more time dealing with constituents’ problems—it made it clear that a wage hike can have a range of results, even within one governmental body.

So how should Bostonians feel about the possibility of their City Council getting paid more? To hear Councilor Frank Baker of Dorchester tell it, we should be reasonable, and have empathy: “It’s difficult to live in Boston,” Baker told the Globe recently, after stating he would vote for the wage hike. “I know $87,500 seems like a lot, but for a family of four and for the amount of work that we do?...We put in a lot of hours.”

Exactly what those hours are spent on—and whether we think more money would truly motivate our councilors to do those things better—might be the crucial question. “The incentive for a city councilor to work hard is to get reelected....The additional money wouldn’t make that much of a difference,” said Sam Tyler, president of the Boston Municipal Research Bureau, who believes the mayor’s office should submit to the City Council a more comprehensive salary plan for department heads and other top level positions, in addition to council members.

Asked whether his work on the European Parliament had led him to prefer the New Hampshire model to the Singapore model, Raymond Fisman of Columbia expressed exasperation. “You’ve got to be kidding me,” he said. There’s just no clear answer to that question yet, and the context matters too much. What happens when you fatten officials’ paychecks, Fisman said, depends on a range of local factors—on the relationship between individual elected officials and party leaders; on term limits and second jobs and the rules regarding where politicians can work after they leave office.

The only way to get closer to a unified theory of politician pay, Fisman suggested, is to watch attentively whenever elected officials anywhere in the world get a big pay hike, and keep track of how they do by the people and places they serve. “Maybe,” Fisman said, “the Boston City Council will let us start running experiments on them.”

Related:

EDITORIAL: Proposed raises are too much too soon

Linehan proposes 29% raise for City Council

State, city wary of Boston City Council pay hike

Leon Neyfakh is the staff writer for Ideas. E-mail leon.neyfakh@globe.com.
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