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Constructing composite indicators with Shannon entropy: The case of Human Development Index

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  • Karagiannis, Roxani
  • Karagiannis, Giannis

Abstract

In this paper, we propose a weighting scheme for constructing composite indicators based on Shannon entropy. Its main advantages are that it delivers a set of common weights across decision-making units that allow for complete comparison and ranking and is easy to implement. It can also be extended to provide group specific weights. We explore the potential of the suggested weighing method by using it to re-estimate the Human Development Index.

Suggested Citation

  • Karagiannis, Roxani & Karagiannis, Giannis, 2020. "Constructing composite indicators with Shannon entropy: The case of Human Development Index," Socio-Economic Planning Sciences, Elsevier, vol. 70(C).
    • Handle: RePEc:eee:soceps:v:70:y:2020:i:c:s0038012118300375
    DOI: 10.1016/j.seps.2019.03.007
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