Political analysts regularly use terms like ‘two‐party system’ and ‘multi‐party system’ when the number of effective parties in a legislature is hard to measure. In the UK parliament of 2001, for instance, 10 parties were represented in the House of Commons, but seven of them returned only 28 MPs between them. A widely accepted algorithm due to M. Laakso and R. Taagepera calculates the effective number of parties in such circumstances. The formula is N=1/∑pi2where N denotes the effective number of parties and pi denotes the ith party's fraction of the seats. The same process can be used for vote share for each party. This formula is the reciprocal of a well‐known concentration index (the Herfindahl–Hirschman index) used in economics to study the degree to which ownership of firms in an industry is concentrated. Laakso and Taagepera correctly saw that the effective number of parties is simply an instance of the inverse measurement problem to that one. The index makes rough but fairly reliable international comparisons possible.