Title: A principal-agent view of corruption in the South African Police Service: An economic welfare

analysis

Authors:. du Plessis, SWF * and du Rand, G.P **

* University of Stellenbosch
** University of Stellenbosch and Columbia University

Email: sophia@sun.ac.za or gideondurand@sun.ac.za

JEL Codes: D82, J45, K42, L51, M55

Abstract:

Douglass North (1990) writes that, in order to fulfill the role as enforcer of the rules of the game, the enforcer
should have a “monopoly on violence”. This monopoly provides the police with the right to arrest or charge
people that commit some form of crime. Unfortunately the exercise of this power also put them in a position
to abuse it, for instance though bribery, extortion, or the use of excess force. The post-1994 South African
police service enjoys a much wider acceptance than had been the case under apartheid, but unfortunately
this has been accompanied by a growth in police corruption (Bruce, Newham and Masuku 2007).

In assessing policing in a democratic society, one question is whether the police service firstly conveys an
openness to external scrutiny from the media and other sources, and secondly whether its internal practices
supports effective accountability.

We theoretically analyze the agency relationship of the police with four entities: government and society (as
the principal), the media (as a monitoring device), the criminals (the source of harm to society and bribes to
the agent) and the victims (those harmed). We adapt the models of Mookherjee and Png (1992,1995) that
allows for the determination of the socially optimal levels of and trade-offs among various forms of rewards,
punishments, monitoring, corruption and bribery. This allows us to place South Africa on a spectrum of
welfare outcomes, suggests the most important directions for improving outcomes in a cost efficient manner
and provides a rough measure of the potential gains to society that are lost due to our currently suboptimal
environment.

References:

Bruce, D., G. Newham and T Masuku, 2007. In service of the people’s democracy. An assessment of the
South African Police Service. Centre for the Study of Violence and Reconciliation.

Mookherjee, D and Png, I.P.L., 1992. “Monitoring vis-à-vis Investigation in enforcement of Law”, The
American Economic Review, Vol. 82, No. 3, pp. 556 – 565.

________________________, 1995. “Corruptible Law Enforcers: How Should They Be Compensated”, The
Economic Journal, Vol. 105, No. 428 (Jan), pp. 145 – 159.

North, D.C., 1990. Institutions, Institutional Change, and Economic Performance. Cambridge, Ma.: Harvard
University Press.