Winning Isn’t Everything: Corruption in Sumo Wrestling

There is a growing appreciation among economists of the need to better understand the role that corruption plays in real-world economies. Although some have argued that it can be welfare enhancing (Nathaniel Leff, 1964), most commentators believe that a willingness to accept bribes (or similar forms of corruption) in either the public or the private sector reduces economic efŽ ciency (Andrei Shleifer and Robert W. Vishny, 1993). As a result, governments and Ž rms often create incentives to motivate their employees to be honest (Gary S. Becker and George J. Stigler, 1974). While it is generally agreed that corruption is widespread, there is little rigorous empirical research on the subject. Because of corruption’s illicit nature, those who engage in corruption attempt not to leave a trail. As a consequence, much of the existing evidence on corruption is anecdotal in nature. More systematic empirical substantiation of corrupt practices is unlikely to appear in typical data sources. Rather, researchers must adopt nonstandard approaches in an attempt to ferret out indirect evidence of corruption. To date, there have been only a handful of studies that attempt to systematically document the impact of corruption on economic outcomes. The Ž rst empirical study of corruption dates to 1846 when Quetelet documented that the height distribution among French males based on measurements taken at conscription was normally distributed except for a puzzling shortage of men measuring 1.57–1.597 meters (roughly 5 feet 2 inches to 5 feet 3 inches) and an excess number of men below 1.57 meters. Not coincidentally, the minimum height for conscription into the Imperial army was 1.57 meters (Stephen Stigler, 1986).More recent empirical work on corruption includes Robert H. Porter and J. Douglas Zona (1993), which Ž nds evidence that construction companies collude when bidding for state highway contracts by meeting before the auction, designating a serious bidder, and having other cartel members submit correspondingly higher bids. R. Preston McAfee (1992) details a wide variety of bidrigging schemes. Paulo Mauro (1995) uses subjective indices of corruption across countries to demonstrate a correlation between corrupt governments and lower rates of economic growth, although the relationship may not be causal. Ray Fisman (2001) analyzes how stock prices of Indonesian Ž rms  uctuate with changes in former Prime Minister Suharto’s health status. Firms with close connections to Suharto, which presumably beneŽ t from corruption within the regime, decline substantially more than other Indonesian Ž rms when Suharto’s health weakens. Whether the rents accruing to those close to Suharto are due to corruption or simply bad policy, however, is hard to determine. Rafael Di Tella and Ernesto Schargrodsky (2000) document that the prices paid for basic inputs at public hospitals in Buenos Aires fall by 10–20 percent after a corruption crackdown. In this paper we look for corruption among Japan’s elite sumo wrestlers. While acknowledging that sumo wrestling is not itself a subject of direct interest to economists, we believe that this case study nonetheless provides potentially valuable insights. First, if corrupt practices thrive here, one might suspect that no institution is safe. Sumo wrestling is the national sport of Japan, with a 2,000-year tradition and a focus on honor, ritual, and history that may be unparalleled in athletics. Moreover, Japan is generally * Duggan: Department of Economics, University of Chicago, 1126 East 59th Street, Chicago, IL 60637, and National Bureau of Economic Research (e-mail: mduggan@midway .uchicago.edu); Levitt: American Bar Foundation and Department of Economics, University of Chicago, 1126 East 59th Street, Chicago, IL 60637 (e-mail: slevitt@midway .uchicago.edu).We would like to thank Gary Becker, Casey Mulligan, Andrei Shleifer, Stephen Stigler, Mark West, two anonymous referees, seminar participants, and especially Serguey Braguinsky for helpful comments. Kyung-Hong Park provided truly outstanding research assistance. Levitt gratefully acknowledges the research support of the National Science Foundation and Sloan Foundation. 1 See Mark West (1997) for an examination of the legal rules and informal norms that govern sumo wrestling in Japan.