Democracy as a latent variable

We apply formal, statistical measurement models to the Polity indicators, used widely in studies of international relations to measure democracy. In so doing, we make explicit the hitherto implicit assumptions underlying scales built using the Polity indicators. Modeling democracy as a latent variable allows us to assess the "noise" (measurement error) in the resulting measure. We show that this measurement error is considerable and has substantive consequences when using a measure of democracy as an independent variable in cross-national statistical analyses. Our analysis suggests that skepticism as to the precision of the Polity democracy scale is well founded and that many researchers have been overly sanguine about the properties of the Polity democracy scale in applied statistical work.