observed correlations among expert assessments: if these are substantially higher, this would suggest that correlated perceptions errors may be playing a role.<sup>18</sup> If in addition the source of this correlation among commercial business information providers is that they adjust their estimates from year to year to smooth out previous discrepancies from other commercial providers, this would imply that the correlations among commercial business information providers will increase over time as these discrepancies are reduced (see Kaufmann, Kraay and Mastruzzi (2006) for further details).

To assess whether this holds true in the data, Figure 3 reports summary statistics on two sets of correlations over time. We focus on expert assessments from the four main commercial business information providers in our database: Economist Intelligence Unit, Crisis24, Political Risk Services, and S&P Global, and compare them with two firm surveys (World Economic Forum and World Competitiveness Report Executive Opinion Surveys). We focus on these data sources because they are arguably the most homogenous in the sense that they all provide perception of the quality of governance primarily from a business-oriented viewpoint. For each of the six aggregate WGI measures and for every year since 2005, we compute (a) the pairwise correlation between each of the commercial providers and each of the surveys, and (b) the pairwise correlation between each of the commercial providers.<sup>19</sup> We then average all the correlations within (a) and (b) for each indicator and year and plot them over time. The six panels of Figure 3 report these correlations. The first striking feature of this graph is that for five of the six aggregate WGI measures, the expert assessments from commercial providers are no more correlated among themselves than they are with firm surveys, i.e., the solid line (capturing expert-expert correlations) is very close to the dashed line (capturing expert-survey correlations). The second striking feature of the graph is that there is little evidence that the expertexpert correlations are increasing over time, i.e., the solid line (capturing expert-expert correlations) is quite flat or even slightly declining for across all six indicators. This evidence is inconsistent with the view that expert assessments from commercial providers tend to make correlated perceptions errors and/or try to average out past discrepancies among themselves.<sup>20</sup>

> 18 It is important to note that this is a demanding test – a higher correlation among expert assessments could also be due to the fact that they provide more precise measurement.  However, to give the benefit of the doubt to the hypothesis of correlated measurement error, we interpret any difference between expert-expert versus expertsurvey correlations are reflecting correlated measurement error.

> 19 To ensure the comparability of these two sets of correlations, we calculate pairwise correlations among commercial providers separately in the set of countries covered by each of the surveys.

> 20 This also relates to our point at the end of Section 2.1 about not constructing a single overall governance indicator out of the six WGI aggregate measures.  Within each of the six aggregate indicators, we rely on questions from different data sources, and as we have argued in this section, it seems plausible that measurement errors are

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