Over the last two decades, numerous studies have tried to quantify the effect of property rights on a wide range of societal outcomes, including growth, trade, and, to a lesser extent, inequality. However, a major limitation of these studies has been the data measuring property rights. These suffer from a number of shortcomings, including a lack of availability, focus, and objectivity.
Ouattara and Standaert address this gap by composing a new index of property rights that strictly focuses on the protection of these rights. As is common with indicators of governance, there is little to no objective data available that can be used to directly compare the security of property rights across countries. Instead, perception-based indicators such as survey-data or expert assessments are used to capture the opinion of a range of actors. The researchers' approach is to combine a data set of 18 such indicators from 7 different sources. The selection of an indicator depends on whether it directly measures the degree to which a country's laws protect private property rights and the degree to which its government enforces those laws, including the probability that private property is expropriated. By focusing on property rights alone, this allows the researchers to disentangle its effect from that of the overall quality of the judicial system and other aspects of the institutional framework. This ensures a better match between theoretical models and empirical tests on the effects of property rights.
This is done for as wide a group of countries and as long a time span as possible, increasing the index coverage by as much as 45% compared to other indexes - this index covers 191 countries cross twenty-year period between 1994 - 2014.