Comments on “How (Not) to Measure
Institutions” by Professor Stefan Voigt
Development Research Group, The World Bank
Measures of institutions should
• Capture de jure and de facto institutions
(or,equivalently(?), formal and informal
• be objective.
• be disaggregated.
These are important, desirable standards.
But application to two key questions is not clear.
• How do we measure the security of property
rights≈ no opportunistic behavior by government?
• How do we measure the determinants of secure
Security of property rights?
Lots of smoke in the literature.
• Rule of law is hard to define.
• Subjective is worse than objective.
• Aggregated is worse than disaggregated.
• ALL TRUE!
But ceteris is not paribus:
• no objective, disaggregated measures of threat of
• And yet theory and qualitative evidence indicate
this is a first order concern in development.
• Hence: scholarly and policy communities (more
or less) embrace subjective indicators.
Measuring threats of gov’t. opportunism
Subjective measures variously labeled “risk of
expropriation”, “rule of law” , etc.
• Noise: low opportunism countries can be rated as
• Misattribution: they pick up other unobserved,
growth-damaging features of countries
Appropriate response – throw out bath water, not baby:
• Ignore differences between Thailand and
Malaysia, Canada and the US, or Brazil and
Mexico. (bath water)
• DON’T ignore conclusions based on comparisons
across many countries. (baby)
Measures of Institutions
Attempts to use institutional measures as proxies for
threat of opportunistic behavior. Problematic.
• Assumes that institutions are the main drivers of
• Assumes that the institutions we measure are the
• Both may be incorrect.
Exposes, instead, an important research agenda:
• under what conditions do governments refrain
from opportunistic behavior?
• Institutional debate REINFORCES dependence on
subjective measures of opportunism!
Institutional measures and opportunism
Presumed institutional determinants of opportunism:
“Tail wagging the dog” constraints on political
• Judicial independence
• Central Bank Independence (opportunistic
behavior in monetary policy)
• Problem: agency independence is a function of
politics (Keefer/Stasavage and many others)
• Political checks and balances (Subjective – Polity;
Objective – Henisz or Database of Political
• Democracy (Subjective – Polity; Objective: DPI,
Przeworski, et al.)
• Problem: No controls for political incentives
Missing: the politics of opportunistic behavior
Institutional puzzle of opportunistic behavior:
• Some democracies/non-democracies restrain
opportunism - many don’t.
• Some parliaments check abusive behavior by executive
• Democracy and checks measures don’t capture these
Poor non- Poor Rich
democ- democ- democ-
racies racies racies
Corruption 2.7 2.9 4.1
(0 – 6, least corrupt = 6), 1997
Bureaucratic quality 2.3 2.4 4.6
(0 – 6, 6 = highest quality), 2000
Rule of law 3.7 2.9 4.6
(0 – 6, 6 = highest quality), 2000
Need more thought/evidence on political
incentives to secure property rights
Secure property rights = public good.
• Opportunistic behavior reduces growth, hurting
• So pursue indicators of government incentives to
provide public goods that vary within dems/non-
dems (e.g., of “political market imperfections”).
Putting the politics into institutions
Types of electoral institutions (PR, list)
Measures of credibility of political promises
• Types of political parties (programmatic/not)
• Age of democracy
Within non-dems: intra-ruling party characteristics?
Can leaders make credible promises to party members?
• Age of party?
• Internal checks on leaders?
• Information distributed to members?
Sources? Unfinished agenda. But: Database of
Political Institutions (WB); Cline Center for Democracy
(U. Ill, Champaign).
Need more nuanced institutional data
• Budget process, Exec – Parliament
• Intra-parliamentary decision making
• Rules for candidate selection
Sources: few, now, but Cline Center for Democracy. . .
In sum. . .
The world needs a better mousetrap to measure threat
of opportunistic behavior. . .
. . . but an objective indicator not on the horizon.
Better place to put resources: improving empirical
basis for investigating determinants of opportunistic
• Measuring political incentives
• Measuring public sector characteristics (pub. sec
fin. mgt; civil service; judiciary; etc) – at least as
intermediate determinants of opportunism.