A Novel Corruption Index

Corruption is a qualitative variable that cannot be calculated directly. There are different approaches and techniques used for estimating corruption levels precisely. However, many new indices have been introduced to measure corruption levels, especially in the last decade. Researchers have used perception or experience indicators, simple data sources or multiple data sources, and proxy measures to estimate corruption in the past. All measures have limitations and drawbacks. The prevalent use of perception matrices to gauge corruption, derived from primary surveys of institutions and experts, presents challenges for cross-country comparisons. Such metrics often exhibit bias, particularly within perception indices. Relying solely on either perception or experience indicators is insufficient to estimate corruption levels accurately. This study introduces a novel approach that amalgamates perception and experience indicators to measure corruption in countries, specifically focusing on Pakistan. This combined index is compared to traditional perception-based indices using a weighted aggregative methodology. The ‘Novel Corruption Index’ portrays a clearer picture of corruption than other averaged perception indices for formulating effective anti-corruption policies by the government, especially tailored for Pakistan. JEL Classification Codes: D73, F35