Why are margins of error important?
Inherent to all Governance Indicators is a margin of error, which might vary from country to country, normally attributable to two factors: (i) cross-country differences in the number of sources in which a country appears, and (ii) differences in the precision of the sources in which each country appears. In spite of the considerable number of individual sources used (which tends to decrease the extent of measurement error), there are still substantial margins of error associated with governance estimates. This implies among other things that it is difficult to assign many countries to a definitive performance category according to their estimated level of governance, and even more difficult to compile precise rankings. It should be emphasized however that over time the standard errors have been sensibly reduced thanks to the increase number of sources utilized. Indeed, while average standard errors in 1996 average 0.30 across the 6 Indicators, in 2006 the figure was reduced to 0.22. I
Inherent to all Governance Indicators is a margin of error, which might vary from country to country, normally attributable to two factors: (i) cross-country differences in the number of sources in which a country appears, and (ii) differences in the precision of the sources in which each country appears. In spite of the considerable number of individual sources used (which tends to decrease the extent of measurement error), there are still substantial margins of error associated with governance estimates. This implies among other things that it is difficult to assign many countries to a definitive performance category according to their estimated level of governance, and even more difficult to compile precise rankings. It should be emphasized however that over time the standard errors have been sensibly reduced thanks to the increase number of sources utilized. Indeed, while average standard errors in 1996 averaged 0.34 across the 6 Indicators, in 2008 the figure was reduced to 0.21.
