Would Paying Politicians More Attract Better Politicians?

Singaporean Prime Minister Lee Hsien Loong at the G20 Cannes summit in 2011. (Photo: Pablo Manriquez)

Whenever you look at a political system and find it wanting, one tempting thought is this: Maybe we have subpar politicians because the job simply isn’t attracting the right people. And, therefore, if we were to significantly raise politicians’ salaries, we would attract a better class of politician.

This is an unpopular argument for various reasons, in part because it would be the politicians themselves who have to lobby for higher salaries, and that isn’t politically feasible (especially in a poor economy). Can you imagine the headlines?

But the idea remains attractive, doesn’t it? The idea is that, by raising the salaries of elected and other government officials, you would a) signal the true importance of the job; b) attract a kind of competent person who might otherwise enter a more remunerative field; c) allow politicians to focus more on the task at hand rather than worry about their income; and d)  make politicians less susceptible to the influence of moneyed interests.

Some countries already pay their government officials a lot of money — Singapore, for instance. From Wikipedia:

Ministers in Singapore are the highest paid politicians in the world, receiving a 60% salary raise in 2007 and as a result Prime Minister Lee Hsien Loong‘s pay jumped to S$3.1 million, five times the US$400,000 earned by President Barack Obama. Although there was a brief public outcry regarding the high salary in comparison to the size of the country governed, the government’s firm stance was that this raise was required to ensure the continued efficiency and corruption-free status of Singapore’s “world-class” government.

Although Singapore recently cut its politicians pay drastically, the salaries remain relatively very high.

But is there any evidence that paying politicians more actually improves quality?

A 2009 paper by Claudio Ferraz and Frederico Finan (abstract; PDF) makes that case:

In this paper, we examine whether higher wages attract better quality politicians and improve political performance using exogenous variation in the salaries of local legislators across Brazil’s municipal governments. The analysis exploits discontinuities in wages across municipalities induced by a constitutional amendment defining caps on the salary of local legislatures according to municipal population. Our main findings show that higher wages increases political competition and improves the quality of legislators, as measured by education, type of previous profession, and political experience in office. In addition to this positive selection, we find that wages also affect politicians’ performance, which is consistent with a behavioral response to a higher value of holding office.

And a new working paper by Ernesto Dal Bo, Frederico Finan, and Martin Rossi (abstract; PDF) finds that the quality of civil servants is also increased when higher wages are offered:

We study a recent recruitment drive for public sector positions in Mexico.  Different salaries were announced randomly across recruitment sites, and job offers were subsequently randomized.  Screening relied on exams designed to measure applicants’ intellectual ability, personality, and motivation.  This allows the first experimental estimates of (i) the role of financial incentives in attracting a larger and more qualified pool of applicants, (ii) the elasticity of the labor supply facing the employer, and (iii) the role of job attributes (distance, attractiveness of the municipal environment) in helping fill vacancies, as well as the role of wages in helping fill positions in less attractive municipalities.  A theoretical model guides each stage of the empirical inquiry.  We find that higher wages attract more able applicants as measured by their IQ, personality, and proclivity towards public sector work – i.e., we find no evidence of adverse selection effects on motivation; higher wage offers also increased acceptance rates, implying a labor supply elasticity of around 2 and some degree of monopsony power.  Distance and worse municipal characteristics strongly decrease acceptance rates but higher wages help bridge the recruitment gap in worse municipalities. 

I am not willing to argue that paying U.S. government officials more would necessarily improve our political system. But, just as it seems a bad idea to pay a schoolteacher less than a commensurately talented person can make in other fields, it is probably a bad idea to expect that enough good politicians and civil servants will fill those jobs even though they can make a lot more money doing something else.

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  1. José Bautista says:

    Hidden due to low comment rating. Click here to see.

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    • Rob says:

      You are ideologically spot on… and as with most other ideologically driven arguments, your idea falls apart on implementation. In the real world, those politicians are working risky, high profile jobs that expose themselves and their families to high stress, relentless criticism, and burdensome levels of personal scrutiny. Any reasonable person would (rightfully) expect to be compensated in proportion to the demands of the job.

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      • brent says:

        My preference would be to reduce their stress and burdens by restricting their access to power and money. That way their compensation would match up as well.

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      • Malcolm says:

        It’s a balancing act, but if you don’t feel that $174,000 is a fair wage, I don’t know what to say. Yes, it is less than what many politicians could make elsewhere but a lower wage does have benefits in the right kind of people. Political office is it’s own reward, as is public service. In business school we were taught about the value of intrinsic rewards (respect, authority, purpose) over extrinsic reward ($,$,$). When you reward people with money you get more people who only value money. Do we really need more of the people who run Wall Street banks running our government?

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      • richard says:

        You are still thinking of it as a JOB rather than a SERVICE. If the highest vote-getter gets paid “market rates”; shouldn’t the people be paid for voting? Isn’t that a related JOB?

        In order to help everyone “get it”, perhaps it is time to OUTLAW volunteering. Make all functions PAID ONLY. Every PTA leader, museum docent, fire fighter and other first responders, national guard member (market rate–i.e., mercenary pay and benefits), etc.

        Everyone LIKES volunteers (and discounted service) UNTIL it’s their turn. Worse, most people (including professional, highly paid politicians) just don’t understand how many functions in this country DEPEND on incredibly skilled volunteers. Why can’t we return POLITICIAN to that same category?

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    • Lou says:

      I actually think that a high pay salary can attract people with more competences and will make them less leaned towards corruption. People will always be attracted by money. So it is better we attract people who are interested by money and who are actually competent.Being politician is risky and hard. So the competent people will not want to do politics unless the cost of doing it is much lower than the cost of not doing it( since they are competent they may be able to make more money elsewhere). So to attract more competent politician, we need to offer them a high salary.

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  2. jonathan says:

    The idea is wholly unattractive if speaking about elected office versus an appointed or hired-for job. People run for office because of the power inherent in the office.

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    • Enter your name... says:

      It might depend on the office you’re thinking of. I don’t think that junior state legislators find that there is very much power inherent in their office.

      IMO legislative salaries ought to be high enough for the elected official to support a family as well as a decent, middle-class home near the capital (unless your district includes the capital, or unless your government had enough sense to build official residences for legislators). A legislator who is worrying about how to pay the rent, or who has to sleep in his office because he can’t afford to keep up two homes on the salary, isn’t going to be effective.

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      • Darrell says:

        The Jr. State legislators have long since sold off any power the position may have held.

        Look at Illinois and tell me the currency isn’t power. Illinois is held in the hands of Michael Madigan. He controls the purse strings of the Illinois Democrats…if you are a Jr. State Legislator with a differing opinion and you want to speak up about it, you risk losing campaign dollars. Try introducing a bill he doesn’t approve…it dies a silent death.

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    • Zane Geiger says:

      Ideally, they’d be running for office because of the potential benefits they could bring to the state/country, rather than for the inherent power.

      We need to provide better incentives for politicians to do good work, since they are perfectly capable of getting re-elected without doing so.

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  3. richard says:

    Being a teacher is a career. Being a politician isn’t (wasn’t) supposed to be one. When you structure government so that it *requires* fulltime politicians (not the same as appointees/employees who can be paid), then you CREATE the PROFESSIONAL politician.

    This is how we destroyed representative democracy. Instead of “choosing” representatives, we “hire” them…and it turns out that they are hard to terminate (who knew, right).

    Now you can argue that unpaid political service favors the wealthy….but the current system creates the wealthy….is that any better?

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  4. SFOtter says:

    No, it would only continue to attract those that want money and power and would do nothing to ensure ‘good stewardship’. What might work is having the pay & benefits for Federal representatives and Senators taken out of the Federal government’s hands and given to the states they are from. That would keep congress from voting themselves pay raises and having platinum-plated benefits while the rest of us suffer.

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  5. richard says:

    “…it is probably a bad idea to expect that enough good politicians and civil servants will fill those jobs even though they can make a lot more money doing something else.”

    The military?

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    • Rocketman says:

      What about everyone else that is in civil service that gets paid no where near the wage of those in office? They give there lives everyday for the greater good of society and don’t expect too much in return.

      Yes a higher wage will attract a smarter, more educated person to the position but then they are doing it for the wrong reasons. Working as a politician is supposed to be for the greater good of the Country. Not for monetary gain.

      Making 174,000 a year will be more the 90% of the people they represent. Yes they are in the public light, but who knows where there Senator stands on issues or who there Senator is for that matter.

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      • Enter your name... says:

        “Everyone else that is in civil service” does NOT get underpaid. Some civil service positions in the United States are seriously underpaid (congressional staffers spring to mind) and others are paid more than they would get in a private sector job (janitors, for example).

        It’s important to remember that accurate comparisons are based on total compensation, not on paychecks alone. The typical civil service employee gets a generous, lifelong pension with decent retiree healthcare plus a moderate paycheck. The typical private sector employee gets a better paycheck but no pension, no retiree healthcare, and often no (or very little) contribution to non-pension retirement savings.

        When you add it all up, the typical civil service employee’s total compensation is better (except for teachers, which are usually about the same as private sector employees in the end). The civil service employees feel worse off while they’re working, because their neighbor doing similar work has more cash now, but they’re actually far better off in the end, when they’ve got their retirement pay and healthcare package, and their neighbors are wondering why they ever spent that cash on a new car or fancy clothes instead of saving for their retirement years.

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  6. mike law says:

    Doesn’t the respective political party’s selection process have a greater influence on the quality of MPs and other elected officials?

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    • Christina says:

      Well, you have the best and brightest running the top jobs in the most lucrative sectors such as Bankers for example. And when they are so smart, they can outsmart most people, including the heavily guarded regulators, even under watchful eyes. And see where these people get us in our world economy today? How many of the failing banks are the citizens bailing out now, enabled by the governments?

      So imagine the reverse, you have the brightest running the country with the most power. And if they also outsmart the citizens and business community to enrich themselves, eliminate their civic liberties and freedom, how do you get rid of them (other than election every 4 years) if they are even good at gerrymandering? What do you get? You get business elites and the govt elites in cahoots, and you the poor citizens having to bail them out and paying through their nose!! Don’t believe me, just go ask the Singaporeans, how free and happy they really are.

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  7. Max says:

    Have skyrocketing executive salaries resulted in better executives? Certainly, it’s not good to pay officials too little to support themselves – take, for example, Texas, where legislator pay hasn’t been increased since the state was formed. However, top-ranking federal officials are already paid a handsome salary and provided with excellent benefits; they may not be as good as top-ranking corporate positions, but holding a political position dramatically increases a person’s earning power afterward, giving them everything from book deals to highly-paid lobbyist positions.

    It’s not likely to make them more resistant to moneyed interests, either. It’s already quite clear that no matter how much money someone has, they’ll always be tempted by more. After all, it’s not like the many millionaires in the Senate are relying on bribes just to pay their bills – but that doesn’t stop them from taking the bribes.

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  8. Dan Aris says:

    It seems to me that part of the problem with the way things are set up now is not so much that people could become Congresspeople and make $X or become (say) lobbyists and make $X*Y, but rather that people can become Congresspeople who make $X, and then, *because they were Congresspeople*, become lobbyists making $X*Y.

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