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Composite indices, alternative weights, and comparison robustness

Author

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  • Suman Seth

    (University of Leeds
    University of Oxford)

  • Mark McGillivray

    (University of Oxford
    Deakin University)

Abstract

Composite indices are widely used in development economics and can often be highly influential. Yet most remain controversial owing to inter alia the arbitrary selection of component weights. Several studies have proposed testing the robustness of rankings generated by composite indices with respect to alternative weights but have not provided sufficient guidance on the choice of these alternatives. This paper proposes a holistic yet theoretically novel approach for selecting sets of alternative weights and assessing comparison robustness that is applicable to linear composite indices with any finite number of dimensions. Our approach is founded on the main normative assumption that a consensus has been reached on the minimum and the maximum allowable weights that should be assigned to the components. This approach is applied to robustness testing of inter-temporal country improvements generated by arguably the world’s most influential composite development index, the UNDP Human Development Index.

Suggested Citation

  • Suman Seth & Mark McGillivray, 2018. "Composite indices, alternative weights, and comparison robustness," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 51(4), pages 657-679, December.
    • Handle: RePEc:spr:sochwe:v:51:y:2018:i:4:d:10.1007_s00355-018-1132-6
    DOI: 10.1007/s00355-018-1132-6
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    1. Atkinson, A B, 1987. "On the Measurement of Poverty," Econometrica, Econometric Society, vol. 55(4), pages 749-764, July.
    2. Iñaki Permanyer, 2011. "Assessing The Robustness Of Composite Indices Rankings," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 57(2), pages 306-326, June.
    3. Hopkins, Michael, 1991. "Human development revisited: A new UNDP report," World Development, Elsevier, vol. 19(10), pages 1469-1473, October.
    4. James Foster & Mark McGillivray & Suman Seth, 2009. "Rank Robustness of Composite Indices," OPHI Working Papers 26, Queen Elizabeth House, University of Oxford.
    5. Buhong Zheng, 1999. "On the power of poverty orderings," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 16(3), pages 349-371.
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    7. Zheng, Buhong, 2000. "Poverty Orderings," Journal of Economic Surveys, Wiley Blackwell, vol. 14(4), pages 427-466, September.
    8. Miles Cahill, 2005. "Is the Human Development Index Redundant?," Eastern Economic Journal, Eastern Economic Association, vol. 31(1), pages 1-5, Winter.
    9. Koen Decancq & María Ana Lugo, 2013. "Weights in Multidimensional Indices of Wellbeing: An Overview," Econometric Reviews, Taylor & Francis Journals, vol. 32(1), pages 7-34, January.
    10. Zheng, Buhong & Zheng, Charles, 2015. "Fuzzy ranking of human development: A proposal," Mathematical Social Sciences, Elsevier, vol. 78(C), pages 39-47.
    11. James E. Foster & Mark McGillivray & Suman Seth, 2013. "Composite Indices: Rank Robustness, Statistical Association, and Redundancy," Econometric Reviews, Taylor & Francis Journals, vol. 32(1), pages 35-56, January.
    12. repec:oup:wbrobs:v:27:y:2011:i:1:p:1-32 is not listed on IDEAS
    13. Atkinson, Anthony B., 1970. "On the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 2(3), pages 244-263, September.
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    15. A. Atkinson, 2003. "Multidimensional Deprivation: Contrasting Social Welfare and Counting Approaches," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 1(1), pages 51-65, April.
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    Cited by:

    1. Lucio Esposito & Enrica Chiappero‐Martinetti, 2019. "Eliciting, Applying And Exploring Multidimensional Welfare Weights: Evidence From The Field," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 65(S1), pages 204-227, November.
    2. Mehmet Pinar & Thanasis Stengos & Nikolas Topaloglou, 2022. "Stochastic dominance spanning and augmenting the human development index with institutional quality," Annals of Operations Research, Springer, vol. 315(1), pages 341-369, August.
    3. Inaki Permanyer & Suman Seth & Gaston Yalonetzky, 2022. "Inequality measurement for bounded variables," Working Papers 602, ECINEQ, Society for the Study of Economic Inequality.
    4. Guido Kraemer & Markus Reichstein & Gustau Camps-Valls & Jeroen Smits & Miguel D. Mahecha, 2020. "The Low Dimensionality of Development," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 150(3), pages 999-1020, August.
    5. Anna Visvizi & Shahira Assem Abdel-Razek & Roman Wosiek & Radosław Malik, 2021. "Conceptualizing Walking and Walkability in the Smart City through a Model Composite w 2 Smart City Utility Index," Energies, MDPI, vol. 14(23), pages 1-20, December.
    6. Ricard Giné‐Garriga & Agustí Pérez‐Foguet, 2019. "Monitoring and targeting the sanitation poor: A multidimensional approach," Natural Resources Forum, Blackwell Publishing, vol. 43(2), pages 82-94, May.
    7. Suman Seth & Gaston Yalonetzky, 2021. "Assessing Deprivation with an Ordinal Variable: Theory and Application to Sanitation Deprivation in Bangladesh," The World Bank Economic Review, World Bank, vol. 35(3), pages 793-811.
    8. Pinar, Mehmet & Stengos, Thanasis & Topaloglou, Nikolas, 2020. "On the construction of a feasible range of multidimensional poverty under benchmark weight uncertainty," European Journal of Operational Research, Elsevier, vol. 281(2), pages 415-427.

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