Below we discuss these measures of institutions. We make three distinct points.
First, all
three data sets measure outcomes, not some permanent characteristics that North refers to. As such,
all these measures 1) rise with per capita income, and 2) are highly volatile. Both of these facts are
inconsistent with the view that they measure permanent or even durable features of the political
environment.
Second, the first two sets of measures of institutions are constructed so that dictators
freely choosing good policies receive as high evaluations as governments constrained to choose
them. An examination of these variables shows, for example, that dictators who chose to respect
property rights – in the U.S.S.R. or Singapore, for example -- received high scores, which the
literature has interpreted as having “good institutions.” Even if these measures are extremely useful
indicators of policy choices, they are by their very construction not constraints, and therefore
unusable for discussions of how specific constraints on government that would guarantee the
security of property rights. The Polity IV variables are intended to focus on political constraints,
but we show that they too reflect political outcomes rather than durable constraints.