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The 2012 Corruption Perceptions Index was just published and according to it, Greece has the dubious honour of being the most corrupted member of the European Union.

Naturally this stung a bit, and I looked at the relevant Wikipedia article for an explanation of the methods used in the index. It didn't help much, most of the references aren't publicly available and those that are don't really explain much. The criticism section was a bit more revealing about CPI's methodology, but I don't know how substantiated those criticisms are.

Could someone explain to me in layman's terms how corruption is measured?

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    ...and I've just realized the corruption tag didn't exist before this question. I guess it's appropriate that a Greek created it ;P
    – yannis
    Commented Dec 5, 2012 at 9:57
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    Super-difficult to measure that, because as corruption increases you get more corruption court cases and media coverage, but if it increases some more, you get less of those. Perception of corruption is probably also a "non-monotone function" of the level of corruption. Perhaps you actually can't?
    – einpoklum
    Commented Oct 9, 2017 at 12:41

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This 2010 article at nobribe.org claims

Measurement of Corruption thus far, has been limited to measuring perception of Corruption [...] Various approaches to measure Corruption directly may be suggested based on how other intractable quantities are measured. One such model to measure petty Corruption based on Inflation, is discussed [...].

(The latter contains a link that should probably point to an article entitled "Obtaining a Driver's License in India: An Experimental Approach to Studying Corruption".)

As for the methodology of Corruptions Perception Index, a little digging on the Transparency International website leads to a "data package" including a "Source description" pdf mentioning 13 different studies as source, some focussed on corruption, some not, often relying on a limited number of "experts" (e.g. 2 per country for study 3, 4200 responding "business executives", apprently in total, for study 7) to "assess" (not: "measure") a question, sometimes longer and detailed, sometimes shorter (e.g. “Bribing and corruption: Exist or do not exist”) on a given scale.

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