Epidemics, Rent Extraction, and the Value of Holding Office

Public officials who control access to scarce resources may profit by extracting extraordinary rents during the economic disruptions that follow epidemics. This can increase the value of holding office during these crises. Using data on the sales of public offices in colonial Mexico, we show that while the negative effects of epidemics limited the value of office in most areas, in districts with a public granary — an institution that regulated grain markets in times of food scarcity — aspiring officeholders were willing to pay more for positions following disease outbreaks. Historical evidence suggests that the differential increase in office prices in areas with a granary can be traced to officials' ability to manipulate food prices and supply for personal gain during crises. This highlights the important roles of economic monopoly and political corruption in determining the consequences of epidemics.