Investment analyst Peter Tasker has criticised the Democracy Index for lacking transparency and accountability beyond the numbers. To generate the index, the Economist Intelligence Unit has a scoring system in which various experts are asked to answer 60 questions and assign each reply a number, with the weighted average deciding the ranking. However, the final report does not indicate what kinds of experts, nor their number, nor whether the experts are employees of the Economist Intelligence Unit or independent scholars, nor the nationalities of the experts.[17]

From https://en.m.wikipedia.org/wiki/The_Economist_Democracy_Index

So yeah, it’s basically the subjective opinion of unnamed “experts”.