PSD looking into study alleging civil servants 'disproportionately' bought homes near unannounced MRT stations

It will refer to the Corrupt Practices Investigation Bureau if there is a material basis to do so, a PSD spokesperson said.

The government is looking into the data and methodology of an academic working paper which found that civil servants in Singapore disproportionately purchased homes near planned MRT stations before they were publicly announced.

The working paper was published by American non-profit National Bureau of Economic Research (NBER) and is titled "Do Social Norms Substitute For Enforcement? Evidence from Public Officials' Home Purchases in Singapore".

In response to media queries, a spokesperson for the Public Service Division (PSD) said that PSD is aware of the working paper and its findings.

PSD is an agency under the Prime Minister's Office.

"We take any integrity concerns extremely seriously. We are currently reviewing the data and methodology within the paper and will refer to CPIB (Corrupt Practices Investigation Bureau) if there is a material basis to do so," the PSD spokesperson said.

According to the paper's abstract, the researchers looked at "whether pro-integrity social norms can substitute for formal enforcement in deterring misconduct by public officials".

Singapore was selected as the case study as it is widely regarded as one of the world's least corrupt countries and provides a "sharp setting" to examine whether sustained anti-corruption enforcement can produce "self-sustaining norms".

The researchers referred to private-property transactions from legal filings in Singapore and information from the Singapore Government Directory Interactive to identify civil servants and trace their home transaction histories.

They focused on purchases near planned but not yet publicly announced MRT stations around announcement dates to proxy for access to privileged location information.

Based on their assembled data, the researchers concluded that they found clear evidence of informed trading by civil servants.

"Civil servants disproportionately purchase homes near planned — but not yet publicly announced — stations, with the effect concentrated one to two years before public announcements."

They also claimed that these generated "meaningful private gains" and also appear among relatives, which is consistent with information leakage.

Using a large-language model assisted classification, they found that such behaviour is concentrated among mid-level officials.

The researchers also considered whether civil servants are simply better processing public information rather than relying on privileged information, but did not find similar home-purchasing patterns in other groups which they deemed to possess "high information-processing sophistication", such as real estate agents and corporate board members.

The paper also found that legislative changes in 2012 that targeted information security practices and market misconduct, namely the Securities and Futures (Amendment) Act 2012 and Official Secrets Act Revisions (2012), "shut down" such behaviour.

It concluded that "even in high-integrity societies, social norms may not be sufficiently self-sustaining to maintain a low-corruption equilibrium without continued formal enforcement".

The academic working paper was written by co-authors from Stanford University, Columbia University and the University of Hong Kong.

In its preface, the co-authors noted that NBER working papers are circulated for discussion and comment purposes and have not been peer-reviewed or reviewed by its board of directors.

They also noted that their findings benefitted from discussions with a number of academics, such as economics professor Chang-Tai Hsieh from the University of Chicago, professor of economics and business administration from Harvard University, and academics Ivan Png and Sumit Agarwal from National University of Singapore.

Economics professor Li Shengwu from Harvard University was also mentioned. Li is the son of Lee Hsien Yang and grandson of the late Prime Minister Lee Kuan Yew.