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

Klaus Gründler (gruendler@ifo.de) and Tommy Krieger

No 7480, CESifo Working Paper Series from CESifo

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.

Keywords: aggregation; data transformation; democracy; economic development; indices; machine learning; measurement of democracy; political transitions; scaling (search for similar items in EconPapers)
JEL-codes: C26 C43 O10 O43 P16 P48 (search for similar items in EconPapers)
Date: 2019
New Economics Papers: this item is included in nep-big, nep-cmp and nep-pol
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (18)

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