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Since 1995, the global anti-corruption coalition Transparency International has issued the Corruption Perceptions Index (CPI). Drawing from expert opinions, assessments, and surveys, the coalition scores and ranks countries based on “perceived levels of public sector corruption.” Transparency International defines corruption as “the abuse of entrusted power for private gain.” The definition covers a wide range of rigged behavior, from bribery to cronyism.
In terms of the Corruption Perceptions Index specifically, countries receive a ‘corruption score’ between 0 to 100. 0 indicates the most amount of corruption (‘highly corrupt’); 100 indicates little corruption (‘very clean’). The 2020 iteration, published in January 2021, includes 180 countries and spans May 2019-May 2020.
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2020 CPI Rankings
The map above shows the global picture of perceived corruption. Sizable parts of Africa, Asia, and the mid-to-Southern parts of the Americas appear to be on the ‘highly corrupt’ end, according to Transparency International’s data.
The map and chart can be found in the 2020 Corruption Perceptions Index
The top-ranking countries (i.e. with the lowest score for perceived corruption) include Denmark (88), New Zealand (88), Finland (85), Singapore (85), Sweden (85), Switzerland (85). The lowest-ranking countries include Venezuela (15), Yemen (15), Syria (14), Somalia (12), and South Sudan (12). The U.S. ranked 25th, with a score of 67.
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⅔ countries received a score below 50. The average score was 43.
Methodology of the Corruption Perceptions Index
The current methodology (since 2012) involves four steps: selecting source data, standardizing source data, aggregating and averaging the rescaled data, and measuring uncertainty. Transparency International has also implemented a quality control mechanism into the process. Two in-house researchers and two independent researchers from academia conduct independent research, collecting data and calculating scores to verify those provided from the official sources.
We have outlined the four steps below, but you can download and read the methodology document from the 2020 page linked in the introduction.
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1. Select data sources
Each data source must satisfy the following criteria to be used to construct the Corruption Perceptions Index:
- Quantifies perceptions of corruption in the public sector
- Utilizes sound, reliable, and valid methodology that generates sufficient variance in scores and is applied to all researched countries
- Conducted by or through a credible institution
- Studies and gives ratings to enough countries
- A country expert or business professional approves the rating
- The institution repeats its assessment at least biennially
For the 2020 CPI report, 13 data sources were used. Transparency International provides a detailed summary of each one here.
2. Standardize data
The data aggregated from each approved source is adapted to the CPI scale of 0-100.
This is achieved by subtracting the mean of each source in the baseline year from each country score and then dividing by the standard deviation of that source in the baseline year. According to Transparency International, subtracting and dividing with the baseline year parameters ensures that the CPI scores are comparable year to year.
The standardised scores then get transformed to the CPI scale by multiplying with the value of the CPI standard deviation and adding the mean of CPI.
3. Calculate the average
Three different sources must have assessed a country or region for Transparency International to include it in the Corruption Perceptions Index. The coalition believes this minimum requirement allows it to confidently assess the perceived corruption in a country/region.
The average of the scores from three or more sources is what gets used for the CPI.
4. Report a measure of uncertainty
A standard error and confidence interval accompanies the score for each country, capturing the variation of data sources available for that country/territory.
Measuring the Economic Damages Caused by Corruption
Economic researchers, particularly in the 2000s, used the Corruption Perceptions Index as a jumping-off point or foundational data to study the effects of corruption.
Professor Paul G. Wilhelm published a study in 2002 in the Journal of Business Ethics, examining the data provided by the Corruption Perceptions Index. He claims that “a very strong significant correlation” exists between a country’s CPI score, GDP, regulatory overabundance, and Black Market activity.
His data suggests that countries/regions that have low CPI scores (i.e. high corruption) tended to have an “overabundance of regulation,” a thriving black market, and a low(er) GDP. On the other hand, countries/regions with high CPI scores (i.e. clean) tended to have a high real gross domestic product per capita (RGDP/Cap).
In 2007, a group of professors collaborated on a paper studying the influence of corruption on economic growth rate and foreign investments. They found countries/regions with higher CPI rankings had a higher chance of experiencing long-term economic growth and foreign investment. Every point added to their CPI score yielded GDP increases of 1.7%. The professors concluded that corruption has a negative impact on a nation or territory’s economy.
The Flaws of the Corruption Perceptions Index
Despite the research presented above, many critics of the CPI have also emerged over time. Dan Hough, a politics professor at the University of Sussex, penned an article for the Washington Post where he compiled all the main counterpoints against the validity and usefulness of the CPI.
1. Perception, it’s in the name
Perhaps it’s not so much Transparency International’s fault, as it is an issue of how people (including academics) have understood and viewed what the Corruption Perceptions Index actually offers.
The true nature of the data is revealed in the second word in CPI: perceptions.
The coalition does not claim that the CPI measures corruption. The CPI measures perceptions of corruption. So whose perceptions does Transparency International trust? As we mentioned before, experts and business professionals.
But Alex Cobham, a researcher at the Center for Global Development, argues that relying on such a limited demographic (intellectuals and professional elite) often leads to the CPI lacking the important and diverse perspectives of the citizens and government of a given country.
It’s not always as the saying goes: perception is reality. The difference between the perceptions included in the CPI and realities of corruption (as suggested in this study on Brazil) could mean perception disguised or misunderstood as reality is spread. This may reinforce harmful stereotypes, particularly among citizens in countries of power.
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2. The complexities of corruption cannot be captured in one score
Hough asserts: “To boil down a country’s corruption troubles to one score is, to put it mildly, methodologically problematic.”
The CPI essentially functions as a “poll of polls,” an aggregation of the surveys and assessments of research institutions. Hough, however, misses the independent review conducted by researchers and academics, for Transparency International (although his article could have predated this necessary addition to the coalition’s process). Overall though, Transparency International does, for the most part, just “bring everything together to create one score for each territory,” as Hough claims.
Another issue raised deals with the potential significant differences between data collection and calculation methodologies used by each data source. Furthermore, who can say all data sources worked from the same definition of ‘corruption? There isn’t any universally accepted definition nor the law of what even constitutes corruption in practice.
For example, the Swiss government just recently moved to eliminate a tax loophole that made bribes tax deductible. You’d think that would have been addressed long ago. Sometimes corruption becomes so much a part of the way society has been run that the people treat it as a normal part of their life. Hence, the importance of remembering that the Corruption Perceptions Index does not actually measure corruption itself.
3. Scope Limited to the Public Sector
Lastly, the CPI’s scope is limited to government corruption. That means corporate corruption that has potentially caused billions, if not trillions, of damage, does not get accounted for. Crony capitalism involves two sides: unethical officials and corrupt corporations/kleptocrats.
We at the Zero Theft Movement are working to calculate the best estimate for the monetary costs of corruption in the U.S. Corporate, political, and everything in between. Our community isn’t trying to simplify corruption to a single score, nor are they using the definition of a few experts or business professionals. Each holon, or interpretive group, decides what they consider is ‘theft.’
The Zero Theft Movement provides a safe and independent platform where you and your fellow citizens work together to investigate and debate potentially rigged areas across the economy. Through blockchain voting, the way to make all your work permanent, public, and unchangeable, you decide whether (1) theft is or isn’t occurring in a specific area of the economy, and (2) how much is being stolen or possibly saved. Through direct democracy, we can collectively decide where the problem areas are and start working on addressing them systematically.
Standard Disclaimer
The Zero Theft Movement does not have any interest in partisan politics/competition or attacking/defending one side. We seek to eradicate theft from the U.S economy. In other words, how the wealthy and powerful rig the system to steal money from us, the everyday citizen. We need to collectively fight against crony capitalism in order for us to all profit from an ethical economy.
Terms like ‘steal,’ ‘theft,’ and ‘crime’ will frequently appear throughout the article. Zero Theft will NOT adhere strictly to the legal definitions of these terms (since congress sells out). We have broadly and openly defined terms like ‘steal’ and ‘theft’ to refer to the rigged economy and other debated unethical acts that can cause citizens to lose out on money they deserve to keep.