The DB collects its information from expert informants in each country, mostly lawyers, who provide information free of charge. (See charts below) This process is capable of generating reliable data, but three areas of vulnerability need to be addressed. First, the data are provided by few informants, with some data points for a country generated by just one or two firms. Of particular concern is the 'paying taxes' indicator, for which DB relies exclusively on a single firm to provide both the underlying methodology and data for 142 countries. The number and diversity of informants for all indicators needs to be increased and their information validated more systematically. An increase in the informant base will require a systematic vetting process to reduce self-selection bias. Simplifying the questionnaire may also help to encourage more informants to contribute. The Majority of DB Informants are Lawyers and Accountants |  | | Note: Based on a total of 141 questionnaire and supplemental informants. “Other” includes members of the private sector, and one administrative staff and graduate student in China. |
Why Do You Participate?
For Prestige and to Share Experiences | 
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| Second, although DB makes available a great deal of information about its data and methods, it remains insufficiently transparent about the number and types of informants for each indicator, the adjustments its staff make to the data received from informants, and the changes made to previously published data and their effects on the rankings. DB indicators needs to adequately explain to users the possibilities for errors and biases. Third, DB makes much of its country rankings. The rankings entail three weaknesses. First, because most DB indicators presume that less regulation is better, it is difficult to tell whether the top-ranked countries have good and efficient regulations or simply inadequate regulation. Second, the small informant base makes it difficult to measure confidence in the accuracy of the individual indicator values and thus in the aggregate rankings. Third, changes in a country's ranking depend importantly on where it sits on the distribution; small changes can produce large ratings jumps, and vice versa. These factors contribute to anomalies in the rankings. These issues may not in and of themselves jeopardize DB's reliability. But the lack of transparency about them undermines DB's credibility and goodwill. DB's documents and presentations should include full explanations and cautions on these points. |
For more information, download Appendix A: Methodology |
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