What is informality?

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Meaning and definitions

Informality is an umbrella term for a variety of unregulated human activities that go under the radar, stay above or beyond the law, or circumvent the law through loopholes. Informality refers to the world’s open secrets, unwritten rules and hidden practices of getting things done. Informal practices are the ways of solving problems used where the formal institutions do not make adequate provisions or allow gaming the system and playing the letter of the rules against their spirit. Informal practices may escape official discourse, but they capture the ‘know-how’ of what works in the vernacular. Hence we capture the informality in the language of the participants, and only then relate it to theory, history and analysis.

Is informality good or bad?

Informality is stigmatized. It is often as associated with illegality, corruption and crime, representative of the dark side of human nature such as envy and greed. It is also often attributed to developing societies of the Global South with high levels of poverty and underdevelopment. In fact, informal practices, such as favouritism, often occur because of altruism and desire to be a good friend, parent or child. There are no ‘good’ or ‘bad’ informal practices. Humans are social beings, and their associations are fundamentally ambivalent. In situation where the state is incapable of making provisions, people can fall on their informal networks to take care of their needs and agendas. The ambivalence of informality is represented by boxes B and C in the table below.

© A. Ledeneva 2018
Legal Illegal
Ethical A

Informal practices that facilitate the workings of formal institutions and are overall socially acceptable


Informal practices that are criminalised but socially acceptable in certain communities (small scale smuggling, cash payments for services or giving gifts to doctors and civil servants)

Unethical C

Informal practices that are legal but socially unacceptable or morally questionable (corporate tax optimization)


Informal practices that are criminalised and not socially acceptable overall

Is informality a problem or a solution?

Informal practices are inherently ambivalent. This means that they are both a problem and a solution at the same time. A good example is the use of personal connections. It occurs in all societies. The informal practice can be called differently – "godparents" in Montenegro, "dear brothers" in Finland, "little cousins" in Switzerland, "blat" in Russia, "ties" in the Balkans – but they all help you satisfy needs and change your life for the better, and, conversely, limit your personal freedom by imposing obligations of reciprocity. For many, engaging in informal practices is the only way to survive. Yet their reliance on informality for survival may represent a problem for the society, which develops at a slower rate as a result. This is why the idea that one should get rid of informality is unrealistic. Informality is a kind of social glue in society. Informal practices help to support the formal structure of a society, and at the same time, subvert it.

The most developed area of informality research is urban informality, associated with informal dwelling, squatting, and settling on public land. One may think that removing slum cities will remove the problem of poverty and crime. The urban planners, however, are well aware that this is not an option. Informal settlements are the outcome of shortages of public resources and the consequent incapacity of the state to provide basic services such as water, electricity or waste collection for all. The informal housing is a response to these problems, rather than a problem by itself. The state should be regarded as complicit in the scale of informal settlements and associated practices in developing countries.

How can policy take informality into account?

Informality is ubiquitous and affects all areas of human activity – politics, business and economy, development, housing and public service provisions, migration, cultural integration and socialisation, as well as employment and the labour market. Effectiveness of policy is correlated with its ability to integrate sensitivity to context and understanding of informal practices predominant in a particular country or region. Top-down, one-size-fits-all policies very often do not work as anti-corruption policies of the last decades demonstrate. The particular challenges for policy-makers include: the assumption that formalisation can be a panacea, taking into account the ambivalence of informal practices, i.e. differentiating ‘being a problem’ of informal practices from their ‘being a solution,’ and to offer solutions of what would work, had informal practices were not there.

What does the informal world look like?

It is complex. One might strive to arrive at an orderly view of informality. But informality is disorderly by nature. Its complexity – ‘the overlapping and intersecting relations between authorised and unauthorised, or between regulated and unregulated activities’, as Ananya Roy has put it – offers a fascinating worldview from the ‘bottom-up’ that crosses geographical borders and disciplinary divides in developments studies and urban planning. In the context of (un)employment, concepts of informal sector and informal economy, pioneered by Keith Hart in his research in Ghana have been central. Empirically, The Global Encyclopaedia of Informality organises material on informal practices in clusters: social relationships, solidarity, survival, entrepreneurship, gaming the system, and practices in which power and domination reveal themselves in complex societies. Within those clusters, the practices are organised as follows:

  • Axes 1 and 2: from more socially acceptable practices to more questionable; from daily or regular to once-in-a-lifetime needs and the needs of others;
  • Axis 3: from more traditional/ universal to more modern/temporal practices, responding to a particular constraint and disappearing when that constraint is gone;
  • Axis 4: from practices driven by survival to practices driven by self-expression;
  • Axis 5: from more visible practices to less visible.

How to measure informality?

Quantifying informality usually results in a number of statistics: indices and estimations of the share of informal economy in GDP, or perceptions of the scale of informal practices in a particular country. There are comparative studies: comparisons of social capital and its implications for poverty, health and happiness; and social network analyses. By contrast, this project takes an inductive approach and collect informal practices, relying on the idea of practice captured in a language game proposed by the philosopher Ludwig Wittgensteinand in prospect aims to estimate the spread of specific practices in their locality, region, or country by crowdsourcing. This method will make it possible to monitor changes and grasp trends in the emergence or decline of informal practices, as a response to the changes in formal (political, legal, or economic) frameworks. You can start exploring informality through the practices in the project's dataset or read a sample entry.