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Creating Composite Indicators with DEA and Robustness Analysis: the case of the Technology Achievement Index

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Author Info

  • Laurens Cherchye

    ()

  • Wim Moesen

    ()

  • Nicky Rogge

    ()

  • Tom Van Puyenbroeck

    ()

  • Michaela Saisana

    ()

  • A. Saltelli

    ()

  • R. Liska

    ()

  • S. Tarantola

    ()

Abstract

Composite 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 Info

Paper provided by Katholieke Universiteit Leuven, Centrum voor Economische Studiën, Working Group Public Economics in its series Public Economics Working Paper Series with number ces0613.

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Length: 21 pp.
Date of creation: 2006
Date of revision:
Handle: RePEc:wpe:papers:ces0613

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Keywords: composite indicators; aggregation; weighting; Internal Market;

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References

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  1. Sen, Amartya, 1997. "On Economic Inequality," OUP Catalogue, Oxford University Press, number 9780198292975, October.
  2. Michela Nardo & Michaela Saisana & Andrea Saltelli & Stefano Tarantola & Anders Hoffman & Enrico Giovannini, 2005. "Handbook on Constructing Composite Indicators: Methodology and User Guide," OECD Statistics Working Papers 2005/3, OECD Publishing.
  3. Laurens Cherchye & & Timo Kuosmanen, 2002. "Benchmarking Sustainable Development: A Synthetic Meta-index Approach," Others 0210001, EconWPA, revised 08 Oct 2002.
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Citations

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Cited by:
  1. Ernest Reig, 2012. "Building an Enlarged Human Development Indicator: Europe and the Southern Mediterranean Basin," Working Papers 1203, Department of Applied Economics II, Universidad de Valencia.
  2. Darold Barnum & John Gleason, 2011. "Measuring efficiency under fixed proportion technologies," Journal of Productivity Analysis, Springer, vol. 35(3), pages 243-262, June.
  3. Billaut, Jean-Charles & Bouyssou, Denis & Vincke, Philippe, 2010. "Should you believe in the Shanghai ranking? An NCDM view," Economics Papers from University Paris Dauphine 123456789/2947, Paris Dauphine University.
  4. Montalvo, Carlos & Moghayer, Saeed, 2011. "State of an innovation system: theoretical and empirical advance towards an innovation efficiency index," MPRA Paper 38002, University Library of Munich, Germany.
  5. Cherchye, Laurens & Moesen, Willem & Rogge, Nicky, 2009. "Constructing a Knowledge Economy Composite Indicator with Imprecise Data," Working Papers 2009/16, Hogeschool-Universiteit Brussel, Faculteit Economie en Management.
  6. Van den Bossche, Filip & Rogge, Nicky & Devooght, Kurt & Van Puyenbroeck , Tom, 2009. "Robust CSR Investment Screening," Working Papers 2009/05, Hogeschool-Universiteit Brussel, Faculteit Economie en Management.
  7. C. O’Donnell & K. Nguyen, 2013. "An econometric approach to estimating support prices and measures of productivity change in public hospitals," Journal of Productivity Analysis, Springer, vol. 40(3), pages 323-335, December.
  8. Jean-Charles Billaut & Denis Bouyssou & Philippe Vincke, 2010. "Should you believe in the Shanghai ranking?," Post-Print hal-00388319, HAL.
  9. Bryony Hoskins & Massimiliano Mascherini, 2009. "Measuring Active Citizenship through the Development of a Composite Indicator," Social Indicators Research, Springer, vol. 90(3), pages 459-488, February.
  10. Andrew Sharpe & Brendon Andrews, 2013. "An Assessment of Weighting Methodologies for Composite Indicators: The case of the Index of Economic Well-being," CSLS Research Reports 2012-10, Centre for the Study of Living Standards.

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