My elf lament: I have written about this before, but need to revisit because the problem is still with us. Which problem is that? ELF? No, not Santa's helpers but Ethnic Fractionalization Indexes. Huh? In the study of civil war and other topics, scholars frequently say "ethnicity may matter, so let's see if it does by tossing in this indicator." Ethnic fractionalization refers to how diverse a society is by essentially measuring how likely is it for a person to bump into a person from another ethnic group.
Scholars of ethnic conflict do not argue that more diversity means more conflict, but that the existence of some diversity means that ethnic conflict is possible. Not so much ethnic conflict in North Korea, for example. But if we care about ethnic politics, then we still have to think about demography--how ethnicity is structured in the political system. Rather than focusing on more diversity--that there are many, many ethnic groups, we can and should think about whether they are polarized or concentrated.
Polarization: whether the political system revolves around a few large groups? We might expect more ethnic conflict in such cases than when there are so many groups that no one dominates. If ethnic conflict is driven by fears of domination (see Donald Horowitz and not just my take on the Ethnic Security Dilemma), then an ethnically polarized country is more likely to have ethnic conflict.
Concentration: are the groups intermixed or are they concentrated? While the earliest versions of the ethnic security dilemma argued that intermixing created vulnerability and thus conflict, the statistical findings show the opposite. Concentrated ethnic groups engage in more violence precisely because they are not deterred by their vulnerability.
Of course, the real answer to all of this is that ethnicity affects politics via institutions (probably not an accident this is my most cited work) so one might want to consider how ethnic groups are represented or excluded or empowered or repressed via electoral laws, federalism, and the like. I used to be in that business and hope to do some more work in that area in the near future.
Anyhow, I keep seeing manuscripts that I review for journals as well as other stuff that keeps using ELF when the author wants to include ethnicity in their model somehow. But again, the problem is this: what does diversity mean? Dropping an indicator of diversity into a model does not "account for" or "take seriously" ethnicity. It is absolutely the least one can do. And if one gets results, what do those results mean? If there is generally no theory of ethnic conflict included in the discussion, just a few lines justifying the need to think about ethnicity, then what would a significant correlation mean?
So, my advice to scholars and students is this: if you want to think about how ethnic politics might affect the dependent variable that you care about, then ... THINK about ethnic politics.