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Should We Care (More) About Data Aggregation? Evidence from Democracy Indices

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  • Klaus Gründler
  • Tommy Krieger

Abstract

Aggregation tools transform multidimensional data into indices. To investigate how the design of an aggregation process influences regression results, we build democracy indices that differ regarding their scale and aggregation function. Our results show that the shape of the aggregation function significantly affects OLS and 2SLS estimates since different shapes produce systematically different index values for regimes at the lower and upper end of the democracy spectrum. We also find that dichotomous indices produce significantly smaller OLS estimates than continuous indices because of greater measurement uncertainty. Whether continuous and dichotomous indices cause different 2SLS estimates depends on their design.

Suggested Citation

  • Klaus Gründler & Tommy Krieger, 2019. "Should We Care (More) About Data Aggregation? Evidence from Democracy Indices," CESifo Working Paper Series 7480, CESifo.
  • Handle: RePEc:ces:ceswps:_7480
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    Citations

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    Cited by:

    1. Klaus Gründler & Niklas Potrafke & Timo Wochner, 2020. "Structural Reforms and Income Inequality: Who Benefits From Market-Oriented Reforms?," EconPol Policy Reports 18, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    2. Fabio Monteforte & Jonathan R. W. Temple, 2020. "The autocratic gamble: evidence from robust variance tests," Economics of Governance, Springer, vol. 21(4), pages 363-384, December.
    3. Gründler, Klaus & Potrafke, Niklas, 2019. "Corruption and economic growth: New empirical evidence," European Journal of Political Economy, Elsevier, vol. 60(C).
    4. Martin Mosler, 2020. "Autocrats in the United Nations General Assembly: A Test of the Decoy Voting Hypothesis," ifo Working Paper Series 340, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    5. Klaus Gründler & Tommy Krieger, 2021. "Using Machine Learning for Measuring Democracy: An Update," CESifo Working Paper Series 8903, CESifo.
    6. Johannes Blum, 2020. "Democracy’s Third Wave and National Defense Spending," ifo Working Paper Series 339, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    7. Mosler, Martin, 2021. "Autocrats in the United Nations General Assembly: A test of the decoy voting hypothesis," European Journal of Political Economy, Elsevier, vol. 67(C).
    8. Klaus Gründler & Arye L. Hillman, 2021. "Ambiguous Protection," CESifo Working Paper Series 8888, CESifo.
    9. Krieger, Tommy, 2019. "Democracy and institutional quality: Theory and Evidence," VfS Annual Conference 2019 (Leipzig): 30 Years after the Fall of the Berlin Wall - Democracy and Market Economy 203507, Verein für Socialpolitik / German Economic Association.
    10. Klaus Gründler & Armin Hackenberger & Anina Harter & Niklas Potrafke, 2021. "Covid-19 Vaccination: The Role of Crisis Experience," CESifo Working Paper Series 9096, CESifo.
    11. Krieger, Tommy, 2020. "Elite structure and the provision of health-promoting public goods," ZEW Discussion Papers 20-064, ZEW - Leibniz Centre for European Economic Research.
    12. Kammerlander, Andreas & Schulze, Günther G., 2020. "Are Democracies Cleaner?," European Journal of Political Economy, Elsevier, vol. 64(C).

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    More about this item

    Keywords

    aggregation; data transformation; democracy; economic development; indices; machine learning; measurement of democracy; political transitions; scaling;
    All these keywords.

    JEL classification:

    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation
    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism
    • P48 - Economic Systems - - Other Economic Systems - - - Political Economy; Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies

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