Creating Composite Indicators with DEA and Robustness Analysis: the case of the Technology Achievement Index
AbstractComposite indicators are regularly used for benchmarking countries’ performance, but equally often stir controversies about the unavoidable subjectivity that is connected with their construction. Data Envelopment Analysis helps to overcome some key limitations, viz., the undesirable dependence of final results from the preliminary normalization of sub-indicators, and, more cogently, from the subjective nature of the weights used for aggregating. Still, subjective decisions remain, and such modelling uncertainty propagates onto countries’ composite indicator values and relative rankings. Uncertainty and sensitivity analysis are therefore needed to assess robustness of final results and to analyze how much each individual source of uncertainty contributes to the output variance. The current paper reports on these issues, using the Technology Achievement Index as an illustration.factor is more important in explaining the observed progress.
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Bibliographic InfoPaper provided by Katholieke Universiteit Leuven, Centrum voor Economische Studiën, Working Group Public Economics in its series Public Economics Working Paper Series with number ces0613.
Length: 21 pp.
Date of creation: 2006
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- Cherchye, Laurens & Moesen, Willem & Rogge, Nicky & Van Puyenbroeck, Tom & Saisana, M & Saltelli, A & Liska, R & Tarantola, S, 2006. "Creating composite indicators with DEA and robustness analysis: The case of the technology achievement index," Open Access publications from Katholieke Universiteit Leuven urn:hdl:123456789/119295, Katholieke Universiteit Leuven.
- E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical
- E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
- F02 - International Economics - - General - - - International Economic Order; Noneconomic International Organizations;; Economic Integration and Globalization: General
- O47 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-01-14 (All new papers)
- NEP-INO-2007-01-14 (Innovation)
- NEP-MAC-2007-01-14 (Macroeconomics)
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