Experience Versus Perception in Evaluating the Rule of Law

Abstract: Experience is a major source of knowledge. Could institutions be improved by eliciting the additional knowledge held by experienced individuals? In this paper, I show that experienced individuals are more critical of institutional quality in several areas of the law. Moreover, performance indexes built with experienced subsamples substantially alter country rankings. I argue that more knowledge leads experienced individuals to revise the more benign view held by inexperienced individuals. Moreover, experience is more effective than alternative sources of knowledge, including education, which seemingly reinforce benign and arguably incorrect assessments of institutional quality. After observing how this “experience effect” varies systematically across countries, I conclude by proposing that evaluations of institutional quality should focus on experienced individuals and cautioning against econometric inferences based on assessments made by the general population.