Comments on “How (Not) to Measure Institutions” by Professor Stefan Voigt Philip Keefer...
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Transcript of Comments on “How (Not) to Measure Institutions” by Professor Stefan Voigt Philip Keefer...
Comments on “How (Not) to Measure Institutions” by Professor Stefan Voigt
Philip KeeferDevelopment Research Group, The World
Bank
Key points
SV: Measures of institutions should
• Capture de jure and de facto institutions (or,equivalently(?), formal and informal institutions).
• be objective.• be disaggregated.
PK: 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 property rights?
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 opportunistic behavior.• 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. Problems:
• Noise: low opportunism countries can be rated as high opportunism.
• 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 opportunistic behavior.
• Assumes that the institutions we measure are the most important.
• 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 opportunism:
• Judicial independence• Central Bank Independence (opportunistic
behavior in monetary policy)• Problem: agency independence is a function
of politics (Keefer/Stasavage and many others)
Political institutions:• Political checks and balances (Subjective –
Polity; Objective – Henisz or Database of Political Institutions)/
• 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 –many don’t.• Democracy and checks measures don’t capture
these distinctions.
Poor non-democ-racies
Poor democ-racies
Rich democ-racies
Corruption (0 – 6, least corrupt = 6), 1997
2.7 2.9 4.1
Bureaucratic quality (0 – 6, 6 = highest quality), 2000
2.3 2.4 4.6
Rule of law (0 – 6, 6 = highest quality), 2000
3.7 2.9 4.6
Need more thought/evidence on political incentives to secure property
rightsSecure property rights = public good.
• Opportunistic behavior reduces growth, hurting everyone.
• 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
Within dems: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
Within dems:• 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 behavior.
• Measuring political incentives• Measuring public sector characteristics (pub.
sec fin. mgt; civil service; judiciary; etc) – at least as intermediate determinants of opportunism.