Undesirable specialization in the construction of composite policy indicators: The Environmental Performance Index
AbstractThe non-parametric Data Envelopment Analysis approach is increasingly used to construct composite indicators for country performance monitoring, benchmarking, and policy evaluation in a large variety of fields. The flexibility in the definition of aggregation weights is praised as the method's most important advantage: DEA allows each evaluated country to look for its own optimal weights that maximize the composite indicator relative to the other countries. However, this flexibility also carries a potential disadvantage as it may allow countries to appear as a brilliant performer in a manner that is hard to justify: by ignoring or overemphasizing one or multiple of the judiciously selected performance indicators. To illustrate this issue of undesirable specialization in DEA-based evaluations, this paper compares the Environmental Performance Index (EPI) as computed by the optimistic and pessimistic version of the DEA-model as proposed by Zhou et al. (2007). Based on both computed composites, undesirable specialization in performance is identified.
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Bibliographic InfoPaper provided by Hogeschool-Universiteit Brussel, Faculteit Economie en Management in its series Working Papers with number 2012/08.
Length: 30 page
Date of creation: Feb 2012
Date of revision:
Data envelopment analysis; benefit of the doubt; Composite indicators; Expert opinion; Undesirable specialization; Environmental Performance Index;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-05-08 (All new papers)
- NEP-EFF-2012-05-08 (Efficiency & Productivity)
- NEP-ENV-2012-05-08 (Environmental Economics)
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- H. K. Millington & J. E. Lovell & C. A. K. Lovell, 2013. "Using Fieldwork, GIS and DEA to Guide Management of Urban Stream Health," CEPA Working Papers Series WP072013, School of Economics, University of Queensland, Australia.
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