Last month, Transparency International released its annual Corruption Perceptions Index (CPI). As usual, the release of the CPI has generated widespread discussion and analysis. Previous GAB posts have discussed many of the benefits and challenges of the CPI, with particular attention to the validity of the measurement and the flagrant misreporting of its results. The release of this year’s CPI, and all the media attention it has received, provides an occasion to revisit important questions about how the CPI should and should not be used by researchers, policymakers, and others.
As past posts have discussed, it’s a mistake to focus on the change in each country’s CPI score from the previous year. These changes are often due to changes in the sources used to calculate the score, and most of these changes are not statistically meaningful. As a quick check, I compared the confidence intervals for the 2015 and 2016 CPIs and found that, for each country included in both years, the confidence intervals overlap. (While this doesn’t rule out the possibility of statistically significant changes for some countries, it suggests that a more rigorous statistical test is required to see if the changes are meaningful.) Moreover, even though a few changes each year usually pass the conventional thresholds for statistical significance, with 176 countries in the data, we should expect some of them to exhibit statistical significance, even if in fact all changes are driven by random error. Nevertheless, international newspapers have already begun analyses that compare annual rankings, with headlines such as “Pakistan’s score improves on Corruption Perception Index 2016” from The News International, and “Demonetisation effect? Corruption index ranking improves but a long way to go” from the Hidustan Times. Alas, Transparency International sometimes seems to encourage this style of reporting, both by showing the CPI annual results in a table, and with language such as “more countries declined than improved in this year’s results.” After all, “no change” is no headline.
Although certain uses of the CPI are inappropriate, such as comparing each country’s movement from one year to the next, this does not mean that the CPI is not useful. Indeed, some critics have the unfortunate tendency to dismiss the CPI out of hand, often emphasizing that corruption perceptions are not the same as corruption reality. That is certainly true—TI goes out of its way to emphasize this point with each release of a new CPI— but there are at least two reasons why measuring corruption perceptions is valuable:
- First, corruption perceptions are a good proxy for real corruption. As is well known, corruption’s secretive nature stymies objective measurement, and corruption perceptions are a low-cost way to produce broad-stroke cross-country comparisons for use in research and policy design. Indeed, a prior post on this blog discusses research showing that the CPI has a reasonably strong correlation with other more objective measures of corruption, such as diplomatic parking tickets as a measure of corruption norms, and corporate tax evasion by foreign firms in the US. Other research provides further validation, including microeconomic evidence that corruption perceptions contain information about real corruption levels.
- Second, the perception of corruption may have serious consequences in its own right. Democracy relies on some amount of trust in the government, and on the voluntary law-abiding behavior of most citizens. When a government is perceived to be corrupt, we can expect that trust in government will diminish.
The CPI is a valuable measurement for understanding and combating corruption. Rather than attaching significance to annual changes in a country’s CPI value, we must use it as a more nuanced policy and research tool. Some ways in which the CPI could be used include the following:
- International organizations can refer to the CPI in a given year when evaluating risk levels for corruption in foreign projects. For private corporations, aid organizations, and governments operating abroad, corruption poses a threat to the success of international ventures. In development aid in particular, corruption can mean that well-intentioned resources instead bolster the regime of corrupt governments. The CPI can be useful in evaluating expected corruption levels to plan for potential issues and evaluate risk. For example, consider Namibia and Angola, two neighboring countries with similar GDP per capita and poverty rates. Namibia has a 2016 CPI value of 52 and rank of 53/176, while Angola has a CPI of 18 and a rank of 164/176. Operations in Angola need substantially more oversight than those in Namibia, which may not be apparent without use of the CPI.
- Comparisons of corruption perceptions between similar countries can provide some evidence of the effectiveness of the respective transparency and public integrity policies of those countries. Of course, true policy research requires careful social science to understand the casual relationships at hand. However, CPI differences can be used for exploratory hypothesis generation. In this vein, we ask: what is Namibia doing successfully that can inform policy decisions in Angola?
In sum, while headlines that focus on short-term shifts in CPI values should be treated with extreme caution— particularly when they fail to conduct statistical inference on the differences they report— the CPI, when used correctly, is a valuable tool for policymakers, social scientists, and anyone working in the international sphere.