British Colonial Office ended patronage promotions with an independent board

From the Colonial Office's founding in 1854 until 1930, the Secretary of State for the Colonies held sole personal discretion over which colonial governors were promoted to richer, higher-salaried postings across the British Empire's roughly 70 colonies.

Economist Guo Xu digitized over 3,000 volumes of colonial personnel and public-finance records spanning 1854-1966 to test this directly. 7% salary premium over unconnected governors before 1930 -- and, once in office, these connected governors gave out more tax exemptions, raised less revenue, and invested less than unconnected governors did. Currying favor with local elites and avoiding friction built the kind of reputation that got a governor promoted; raising revenue for the Empire was not what patronage was actually selecting for.

Replaced personal discretion with an independent board, severing the promotion link that made connected governors trade revenue for goodwill.

Promotion depended solely on one superior's discretion, so governors optimized for his approval.

Pleasing the superior meant avoiding friction with local elites, leading to tax exemptions and low revenue.

An independent board removed the personal link, so connected governors no longer had incentive to curry favor.

With promotion no longer tied to personal connection, governors' fiscal behavior converged with unconnected peers.

When advancement depends on one person's judgment, people optimize for that person; replace that discretion with an independent, criteria-based process.

Guo Xu's difference-in-differences analysis found the connected-governor salary premium, statistically significant before 1930, became indistinguishable from zero after the reform (Table 4 of the published paper) -- the same governors' fiscal behavior changed once promotion stopped depending on who they knew, with the fiscal performance gap between connected and unconnected governors closing alongside the promotion gap.