Indicators [1]

The terms "indicator" and "statistic" are often used interchangeably, but they represent different concepts. An indicator is a trend, fact, or measurement that indicates the state or level of something. For example, a governance indicator is a measure that points out something about the state of governance in a country. Governance indicators are usually narrowed down to measure specific areas of governance such as electoral systems, corruption, human rights, public service delivery, civil society, and gender equality. Another type of indicator is an economic indicator, which most often takes the form of a statistic that shows economic trends within a country.

An indicator does not have to come in numeric form. One example is the Freedom House “Freedom in the World” Indicator, which classifies countries as free, partly free or not free.

There are a plethora of indicators on governance that are used by governments, development agencies, non-governmental organisations, the media, academic institutions and the private sector. The indicators are often intended to inform users on business investment, allocation of public funds, civil society advocacy or academic research. From a development perspective, governance indicators can be used for monitoring and evaluating governance programmes and projects. Governance indicators are also often used to establish benchmarks, objectives, targets, and goals in the development context.

Numeric indicators come in two basic forms: simple indicators and complex indicators. Simple indicators are usually composed of single numerical values or statistics and reflect relatively simple concepts. Complex indicators are comprise multiple measurements put together in a form that allows the indicator to measure a complex concept or process. For example, the Human Development Index is an overall measurement of human well being that is composed of a weighted average of nation-level statistics on life expectancy at birth, adult literacy rate, school enrollment, and gross domestic product (GDP) per capita.

When choosing an indicator to use, one must check for the following:

  1. validity (does the indicator measure what it purports to measure?);
  2. reliability (can the indicator be produced by different people using the same coding rules and source material?);
  3. measurement bias (are there problems with systematic measurement error?);
  4. lack of transparency in the production of the indicator;
  5. capacity to be representative (for survey data, what is the nature of the sample of individuals?);
  6. variance truncation (the degree to which scales force observations into indistinguishable groupings);
  7. information bias (what kinds of sources of information are being used?), and
  8. aggregation problems (for complex indicators, to what degree are aggregation rules logically inconsistent or overcomplicated?).

1. Adapted from Governance Indicators: A User's Guide (accessed 28 December 2006).