Selection and Oversight in the Public Sector, With the Los Angeles Police Department as an Example
NBER Working Paper No. 8664
I offer theoretical and empirical observations on the oversight of public sector employees. I argue that it is unreasonable to expect that the solutions typically considered in the literature will be effective with public sector employees, because bureaucrats are especially difficult to monitor. To offset this weakness, agencies tend to hire bureaucrats who are biased against consumers, where such bias increases incentives. I then address how bureaucrats should be overseen and offer a choice between internal monitoring of public agencies, with overseers who are biased against consumers, or external monitoring, where bureaucrats become excessively worried about the prospect of an investigation and may change their behavior to attain that goal. I provide evidence from the Los Angeles Police Department to show that officers appear to have responded to increased oversight by reducing crime-fighting activities in an attempt to avoid investigation.