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Composite Indicators as Decision Making Tools: The Joint Use of Compensatory and Noncompensatory Schemes

Author

Listed:
  • Samira El Gibari

    (Programa de Doctorado en Economía y Empresa, Universidad de Málaga, Calle Ejido 6, 29071 Málaga, Spain)

  • José M. Cabello

    (#x2020;Department of Applied Economics (Mathematics), Universidad de Málaga, Calle Ejido 6, 29071 Málaga, Spain)

  • Trinidad Gómez

    (#x2020;Department of Applied Economics (Mathematics), Universidad de Málaga, Calle Ejido 6, 29071 Málaga, Spain)

  • Francisco Ruiz

    (#x2020;Department of Applied Economics (Mathematics), Universidad de Málaga, Calle Ejido 6, 29071 Málaga, Spain)

Abstract

Composite indicators are powerful tools for summarizing, focusing and condensing the complexity of our dynamic environment, and their use has become indispensable for managing huge amounts of information. An important aspect to emphasize when constructing composite indicators is the compensatory character among the individual indicators. In general, a fully compensatory scheme provides an overall assessment of the performance of each unit, while a non-compensatory scheme detects the worst single performances. When used in a decision making framework, the joint consideration of both schemes may, therefore, be helpful. Nevertheless, in the literature, few approaches allow the construction of composite indicators for different compensation degrees. On these premises, the aim of this paper is to illustrate the behavior of some methodologies that build composite indicators allowing different compensation degrees. We analyze the results provided by each of these methods and which of them provide a more varied complementary information when considering both compensatory and non-compensatory scenarios. An illustrative example is used to visualize the results.

Suggested Citation

  • Samira El Gibari & José M. Cabello & Trinidad Gómez & Francisco Ruiz, 2021. "Composite Indicators as Decision Making Tools: The Joint Use of Compensatory and Noncompensatory Schemes," International Journal of Information Technology & Decision Making (IJITDM), World Scientific Publishing Co. Pte. Ltd., vol. 20(03), pages 847-879, May.
    • Handle: RePEc:wsi:ijitdm:v:20:y:2021:i:03:n:s0219622021500231
    DOI: 10.1142/S0219622021500231
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    Citations

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    Cited by:

    1. Luis Diaz‐Balteiro & Carlos Romero & Silvestre García de Jalón, 2022. "An analysis of the degree of circularity of the wood products industry in Europe," Journal of Industrial Ecology, Yale University, vol. 26(4), pages 1350-1363, August.
    2. Ana Garcia-Bernabeu & José Manuel Cabello & Francisco Ruiz, 2022. "A Reference Point-Based Proposal to Build Regional Quality of Life Composite Indicators," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 164(1), pages 11-30, November.
    3. de Castro-Pardo, Mónica & Cabello, José Manuel & Martín, José María & Ruiz, Francisco, 2023. "A multi reference point based index to assess and monitor European water policies from a sustainability approach," Socio-Economic Planning Sciences, Elsevier, vol. 89(C).
    4. E. Ricciolini & L. Rocchi & M. Cardinali & L. Paolotti & F. Ruiz & J. M. Cabello & A. Boggia, 2022. "Assessing Progress Towards SDGs Implementation Using Multiple Reference Point Based Multicriteria Methods: The Case Study of the European Countries," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 162(3), pages 1233-1260, August.

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