This suggests a pattern of “conspicuous corruption”: Individuals break the law and use their gains as status symbols, knowing that the symbols hint at rule-breaking, as long as the unlawful practice cannot be incontestably established

Louridas P, Spinellis D (2021) Conspicuous corruption: Evidence at a country level. PLoS ONE 16(9): e0255970. https://doi.org/10.1371/journal.pone.0255970

Abstract: People can exhibit their status by the consumption of particular goods or experiential purchases; this is known as “conspicuous consumption”; the practice is widespread and explains the market characteristics of a whole class of goods, Veblen goods, demand for which increase in tandem with their price. The value of such positional goods lies in their distribution among the population—the rarer they are, the more desirable they become. At the same time, higher income, often associated with higher status, has been studied in its relation to unethical behavior. Here we present research that shows how a particular Veblen good, illicit behavior, and wealth, combine to produce the display of illegality as a status symbol. We gathered evidence at a large, country-level, scale of a particular form of consumption of an illictly acquired good for status purposes. We show that in Greece, a developed middle-income country, where authorities cannot issue custom vanity license plates, people acquire distinguishing plate numbers that act as vanity plate surrogates. We found that such license plates are more common in cars with bigger engines and in luxury brands, and are therefore associated with higher value vehicles. This cannot be explained under the lawful procedures for allocating license plates and must therefore be the result of illegal activities, such as graft. This suggests a pattern of “conspicuous corruption”, where individuals break the law and use their gains as status symbols, knowing that the symbols hint at rule-breaking, as long as the unlawful practice cannot be incontestably established.

Discussion

The authors embarked on this study spurred by their subjective observations of high-powered cars having disproportionally more distinctive plates than more middle-of-the-road models, bringing forth the suspicion that this could not be random. The data support the suspicion. After some investigation, it appears that the market for vanity plates in Greece is an open secret, the cost for obtaining a desirable number running to a few hundred Euros. Interestingly, rumors have it that during the financial crisis that hit the country in 2009–2018, prices went down, pointing to an elastic market. The situation has not escaped the attention of the authorities. An investigation carried out in 2005 by the inspectors-auditors of the Ministry of Transport “found transgressions in the license registry by withholding special numbers (e.g., 1414, 6666, 8888 etc.) resulting in large gaps in the license numbers registry” (quoted in reference [30]). That means that civil servants in the Ministry of Transport might be withholding the license numbers corresponding to vanity plates, so that they could then be sold. The racket might involve, apart from the buyer, car dealerships, as they are typically the ones going through the process of obtaining the license when a car is bought.

The relatively low price for acquiring a vanity place distinguishes it from classic Veblen goods, which can be much more expensive. Moreover, a vanity plate, even though desirable, is not by itself a mark of wealth: no vanity plate can turn a run-of-the-mill car to a luxury vehicle, even though it has been found in the Netherlands that a particular license plate format, with absolutely no intrinsic value, increased a car’s price by about 4% [31].

Once a plate has been issued, there is no way to prove, post fact, that a rule was broken. Also, the violation does not result to immediate societal loss. However, the prevalence of rule violations across societies may impact adversely individual honesty [32]; and a conspicuous disregard of norms questions the merits of following them at all.

Conspicuous corruption is not a form of a criminal status symbol. Criminals use signals to communicate [33], but the bearer of a conspicuous corruption status symbol does not use it to display gang membership or affiliation with a criminal organization. Conspicuous corruption works because it cannot be proved that the law has been broken in a particular instance after the desired number has been issued; a license plate is by itself legal, even though it may have been illegaly acquired.

Concerning the interplay of law and social norms, fighting widespread law breaking is not simply a matter of tightening the screws, if laws contravene social norms: excessively strict or badly designed laws can encourage law-breaking in particular circumstances [34]. Although lawyers may think that laws may shape norms, reality may be different, with groups adhering to their own social norms and contravening the applicable legal rules [35]; the interplay of law and norms is complex [36] and regularization of norms by law is a delicate task [37].

We have studied conspicuous corruption in Greece, which raises the question whether it would arise in different countries. China, in a drive against conspicuous corruption, forbids the use of military plates, which confer formal and informal privileges, on luxury cars [38]. In OECD countries, Greece comes third from the bottom in the average trust of the population in the police; last in the confidence in the national government; and fourth from the bottom in trust in others [39]. It would be interesting to investigate whether conspicuous corruption appears only in low trust societies, or in some other societies with particular cultural characteristics. In terms of corruption in general, although Greece is not a paragon of probity, it is not an egregiously corrupt one. The Control of Corruption estimate in 2019 was at −0.01 in a range of −2.5 (weak) and 2.5 (strong) governance performance [40]. In the Global Corruption Index, Greece is ranked 42 out of 198 countries and territories, achieving a low risk evaluation [41].

Other dimensions that may be pertinent to the prevalence of conspicuous corruption in a country is the degree to which people in the country subscribe to individualism or collectivism and the distribution of power in society (power distance) [42]. Greece, having a culture of intermediate collectivism, is not an outlier; in terms of the power distance it also comes at the middle [43], so it does not appear an extreme case that might limit the findings of this study, at least according to these dimensions.

The question of whether people are more likely to cheat if they are more likely to get away with it, has been studied in the context of reported income for tax purposes. Income underreporting varies significantly across countries, from under 10% to more than 40%, with the share of underreporting not appearing to be related to the development level of the countries, and some of the lowest shares of underreporting occuring in Southern European countries, Bulgaria, Greece, Portugal, and Romania [44]. In the US, on average, the self-employed appear to underreport their income by 25% [45] and the net misreporting percentage (underreported amount divided by the sums that should have been reported) of nonfarm proprietor income (nonfarm businesses owned by a single individual) is at a whopping 56% [46]. A similar pattern has been observed in Denmark, where a study found that while the tax evasion rate was close to zero for income subject to third-party reporting, it was substantial for self-reported income [47]. Based on data gathered from leaks (such as the “Panama papers”), researchers have found that in law-abiding Scandinavia, 0.01% of the richest households, which can avail themselves of offshore heavens, evade about 25% of their taxes [48]. The opportunity to cheat, however, is different from a desire to brag about it; discovering instances of conspicuous corruption in different contexts, in other countries, would shed light on whether we have detected an isolated case or a more widespread phenomenon.