Measuring Unmeasurable: How to Map Laws to Numbers Using Leximetrics

Konstantin Kholodilin () and Linus Pfeiffer

No 1933, Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research

Abstract: As the institutional literature convincingly shows, socioeconomic phenomena are to a large extent shaped by the formal institutions, that is, legal acts (laws and ordinances). However, the latter are formulated in a specific language that is difficult to understand, let alone to measure. However, since the early 1990s, a whole branch of economic analysis of governmental regulations has evolved. It is known as leximetrics, i.e., the measuring of laws. It covers a wide range of economic sectors, such as financial, labor, housing, and product markets, among others. The two most popular methods are codification and surveys. Under the first method, the legal texts are analyzed, relevant provisions extracted, and numeric values assigned depending on these provisions. Under the surveys method, local experts are asked to provide their assessment of currently valid legal provisions and sometimes also their enforcement. In both cases, the legal texts are mapped onto real-valued indices with the objective of gauging the intensity of governmental regulations. These indices can be and are successfully used to explain the economic phenomena. This study provides a comprehensive overview of the leximetric literature and demonstrates interdependences between different types of governmental regulations.

Keywords: Leximetrics; governmental regulations; economics (search for similar items in EconPapers)
JEL-codes: C43 H24 K25 R38 (search for similar items in EconPapers)
Pages: III, 31 p.
Date: 2021
New Economics Papers: this item is included in nep-law
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Citations: View citations in EconPapers (1)

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