To test efficiency, economists mail fake letters

CONCORD, N.H. (AP) — A half century after Elvis Presley had a hit with "Return to Sender," a Dartmouth College professor and three other economists have used the same idea to rate the efficiency of the world's governments.

Rafael LaPorta and three economists at other universities mailed letters to nonexistent businesses in 159 countries — two letters to each country's five biggest cities — and waited a year to see which were sent back to the college's Tuck School of Business in Hanover.
The goal was to use a simple and universal service to explore why, other than corruption, developing countries tend to have poorly performing governments. While there is plenty of survey data showing that governments get better as their economies develop, it's not clear why, said La Porta.
"If I tell you the government of Nigeria doesn't work so well, people will often not be surprised, because we know Nigeria is a fairly corrupt country," he said. "What we wanted to do is examine the behavior of government in an environment where corruption is not an issue at all. I'm sending a letter from the U.S., and there's nothing the person in Nigeria can get out of me. So it's a plain letter, there's no monetary value, and there's nothing to be gained by not performing the service."
After a year, 59 percent of the letters were returned, though only 35 percent came back within three months. Only four countries sent all 10 letters back within 90 days: the United States, El Salvador, Czech Republic and Luxembourg. Sixteen countries returned no letters, including Tajikistan, Cambodia, Russia and several in Africa.
For high-income countries, nearly 85 percent of the letters were returned, while less than a third of the letters sent to low-income countries came back. More letters came back, and faster, from highly educated countries.

The results suggest that governments in developing countries suffer from the same inefficiencies as the private sector, including inferior "inputs" (human and physical capital and technology) and mismanagement, the economists wrote in a National Bureau of Economic Research working paper.

While that finding was not surprising, "it is still important to recognize that not all bad government is caused by politics," wrote the group, which also included Alberto Chong of the University of Ottawa, Andrei Shleifer of Harvard University and Florencio Lopez-de-Silanes of EDHEC Business School in France.
All the letters went to countries that subscribe to the Universal Postal Union, which requires that incorrectly addressed mail be returned within a month. Each addressee was a common name in the country. A variety of fake business names were used, such as Computer Management Professionals or Inventory Technology Partners, and names of Nobel laureates in Economics and famous composers were used as street names. Under the address was a notation "Please Return to Sender if Undeliverable."
As for Elvis, La Porta said he did watch "Girls! Girls! Girls!," the 1962 movie that featured "Return to Sender," during his experiment.
"A research assistant pointed us towards this piece of Americana," he said. "It's a very good video — Elvis at his peak."

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