Random and More Random: Evidence of Corruption in the Car Registration Process in the Czech Republic
Authors: Peter Bolcha and Jan Rovný
This paper offers an innovative measure of corruption based on hard data collected in the field. Using a random sample of 5,000 cars we searched for a statistical relationship between the estimated price of a car and its license plate number. We concluded that there is strong evidence of manipulation in the way license plate numbers are assigned, and that their order is not completely random (as claimed by officials). The average price of cars with “attractive” license plates are significantly higher than the price of cars in the rest of the population (with “ordinary” license plates). Moreover, the price difference corresponds to the relative scarcity of a given type of license plate. These results hold after performing several sensitivity tests. Besides evidence of corruption, we concluded that a new law would fail to reduce corruption as intended, and offer avenues for further research.