Measuring Governance: Implications of Conceptual Choices

Introduction

In recent years, governance has quickly turned into a central concept and spawned an outpouring of literature.¹ Many studies highlight impressive correlational evidence, and indices that aggregate myriad indicators of governance, such as the World Bank's Worldwide Governance Indicators (WGI), have gained tremendous importance. Yet, as scholars have started to note, validity questions, conceptual structure issues and the potential for perceptual bias in these indicators need to be considered seriously (Gervasoni, 2006; Kurtz and Schrank, 2007a; Thomas, 2010; Arel-Bundock and Mebane, 2011). Furthermore, the studies that draw on these indicators are often weak in terms of interpretation and explanation (Grindle, 2010).

This article focuses on measurement validity in governance indicators and argues that many of the conceptual weaknesses in the governance literature result from an overreliance on aggregate indices of governance (without knowledge of what these indices measure).² We offer a conceptual and empirical analysis of the leading tool to appraise governance, the WGI, to highlight some of the implications of measurement choices amid a lack of conceptual clarity. As an alternative, we present a Bayesian latent variable approach. This approach offers two advantages. First, it is a principled method that allows the researcher to make explicit the conceptual choices in measuring governance and, consequently, use only those indicators that relate to the issue under study. Second, it provides an honest assessment of uncertainty by letting measurement error (noise) in governance measures propagate into inferences (see also Treier and Jackman, 2008). We argue that this multidimensional and disaggregated approach will lead to greater measurement validity and transparency about the uncertainty in governance measures.³

This article proceeds as follows. It first highlights how the multifaceted concept of governance has evolved over time, underscoring the lack of conceptual consensus. It then discusses three deleterious consequences of aggregating perception-based indicators in the absence of conceptual clarity: (i) the scant attention to content validity; (ii) the conflation of causes, characteristics and consequences of governance; and (iii) the underestimation of uncertainty. In the third section, we present our approach to measuring governance, demonstrating how it overcomes many of the challenges highlighted throughout this piece. The final section concludes.

An Evolving, Multidimensional Concept

This section briefly discusses the conceptual evolution of governance and makes a case for...