Having it at Hand: How Small Search Frictions Impact Bureaucratic Efficiency

Can small search costs that constrain information acquisition and monitoring across the administrative hierarchy provide a substantive explanation for poor bureaucratic performance in the developing world? In collaboration with the Indian Ministry of Rural Development and the state of Madhya Pradesh, we conducted a field experiment in which a random sample of bureaucrats were given access to an internet and mobile-based management and monitoring platform for wage payments associated with a workfare program. The platform did not make new information available, but lowered costs of accessing information about the status of wage bills and officers who needed to take action. Our experiment also randomly varied which level of the administrative hierarchy had access to the e-platform. We find that lower costs of information acquisition reduce payment processing time by up to 21 percent. We document the importance of informed managerial oversight in multiple ways. First, using detailed usage data, we show reduced payment delays only when search costs are reduced at both the intermediate and senior management levels. In addition, usage rates at the intermediate management level are much higher when senior management also has access to the e-platform. Second, using data from two months when data outages reduced information available on platform, we show that simply having better information on which employees are responsible for different activities did not improve monitoring as measured by payment delays.