Key message 1 – The structure of the public sector hinders the access and sharing of information by bureaucrats

What information currently underlies decision-making by public officials across the world? An IGC-funded study by Rogger and Somani (2018) has shown that bureaucrats in Ethiopia predominantly rely on their ‘tacit’ knowledge – their subjective beliefs over the characteristics of citizens, for operational decision-making. Their findings showed that officials misunderstand the basic conditions of their local jurisdictions with half of public officials making errors that were at least 50% of the true underlying data. As an example, 50% of officials claimed that they served a population at least 50% smaller or 50% larger than it actually was. Tacit knowledge can be a positive input to policymaking, but the potential for errors can lead to significant operational mistakes and misallocation of resources when it is the primary source of information.

IGC research in Zambia (see Box 1) indicates that even when administrative data is available for public officials to base their decision-making on, it is of low quality and under-utilised. It shows that better administrative data would allow scarce human resources to be better targeted across the public service.

Why have many public sectors not therefore developed comprehensive information management systems to inform public officials? They have tried. The World Development Report 2016 presents data that indicates governments across the world have invested more in the intensive use of digital technologies than comparable private sector firms. However, the report notes that these investments have not had corresponding impacts, arguing that “digital technologies have not significantly improved service provider management in government bureaucracies” (World Bank 2016). On-going reliance on tacit knowledge is not a consequence of officials not recognising access to other information sources but is consistent with findings where public officials fail to capitalise on the existing information available (World Bank 2012, 2016; Masaki et al. 2017).

The question is under what conditions will public officials acquire and absorb information for improved policymaking? We highlight three defining characteristics of the economics of information used in the public sector and why these might hinder the absorption of information:

  1. As natural monopolies, governments face little competitive market pressure to encourage information sharing. Though many public sector activities naturally touch on the mandates of distinct ministries (road safety is both a transport and health issue) information is typically housed within agencies. There are large transaction costs, and weak incentives, to share it. Shared information must pass across agency filing systems and may lead to lower budgets for a particular agency as it becomes clear that some resources should be directed elsewhere.
  2. An individual official acquires information in the public sector based not only on her own circumstances, but also on the decisions of others (Aghion and Tirole 1997). If another member of your team undertakes the costly effort to learn and organise information for the project you are working on, why should you? Given how much the public sector relies on teamwork, opportunities for such free-riding limits an individual’s incentive to actively access and interrogate data. The distribution of information in public sector hierarchies is therefore determined by the system of incentives for acquiring information and in the interaction of these incentives between managers, subordinates, and colleagues. This leads to a lot of variation in the extent to which officials are informed, and to bottlenecks for the effective transmission of information across the public sector. For example, Best et al. (2017) document ‘islands’ of well-informed procurement officials across the Russian government.
  3. Cultural norms and structures present challenges around bureaucratic conservatism and the influence of mission-orientated officials. Besley and Ghatak (2005) conceptualise organisations that provide public goods as mission-orientated, providing an impetus for them to recruit mission-motivated employees as this is more likely to improve productivity. However, by definition, such employees are less likely to respond to new information or adopt new practices because they have a pre-defined set of missions or beliefs. This increases the conservatism of the public sector, making policy or organisational change more challenging. As IGC research by Williams and Yecalo-Tecle (2020) in Ghana finds, the overwhelming constraint to bottom-up innovation is hostility to new ideas by senior officials. Viewing the world through a pre-defined set of beliefs can even bias the interpretation of new data (Banuri, Dercon and Gauri, 2017).

Box 1: The impact of poor data on teacher allocation in Zambia

Research in Zambia investigated the impact of payroll mismatch on teacher allocation in schools (Walter 2018). Zambia’s Ministry of General Education stated in its 2015 guidelines that Pupil-Teacher Ratios (PTR) should not be greater than 40 students per teacher, a ratio exceeded by 73% of public primary schools. On the other hand, 21% of schools had more teachers than required to meet the standard. This problem can be resolved by intra-school transfer of teachers. But IGC research found at least 40% of teachers do not work at the location they are paid. This payroll mismatch makes it difficult to identify where teachers are based and deploying new teachers to where they are needed most.