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Choosing Aggregation Rules for Composite Indicators

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  • Giuseppe Munda

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Abstract

From a formal point of view, a composite indicator is an aggregate of all dimensions, objectives, individual indicators and variables used for its construction. This implies that what defines a composite indicator is the set of properties underlying its mathematical aggregation convention. In this article, I try to revise the theoretical debate on aggregation rules by looking at contributions from both voting theory and multi-criteria decision analysis. This cross-fertilization helps in clarifying many ambiguous issues still present in the literature and allows discussing the key assumptions that may change the evaluation of an aggregation rule easily, when a composite indicator has to be constructed. Copyright Springer Science+Business Media B.V. 2012

Suggested Citation

  • Giuseppe Munda, 2012. "Choosing Aggregation Rules for Composite Indicators," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 109(3), pages 337-354, December.
  • Handle: RePEc:spr:soinre:v:109:y:2012:i:3:p:337-354
    DOI: 10.1007/s11205-011-9911-9
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    References listed on IDEAS

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    1. Truchon M., 1996. "Voting games and acyclic collective choice rules," Mathematical Social Sciences, Elsevier, vol. 31(1), pages 55-55, February.
    2. Giuseppe Munda, 2003. "Social Multi-Criteria Evaluation (SMCE)," UHE Working papers 2003_04, Universitat Autònoma de Barcelona, Departament d'Economia i Història Econòmica, Unitat d'Història Econòmica.
    3. 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.
    4. Laurent Vidu, 2002. "Majority cycles in a multi-dimensional setting," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 20(2), pages 373-386.
    5. Barthelemy, J. P. & Guenoche, A. & Hudry, O., 1989. "Median linear orders: Heuristics and a branch and bound algorithm," European Journal of Operational Research, Elsevier, vol. 42(3), pages 313-325, October.
    6. Saari, Donald G., 1989. "A dictionary for voting paradoxes," Journal of Economic Theory, Elsevier, vol. 48(2), pages 443-475, August.
    7. Moulin, Herve, 1985. "From social welfare ordering to acyclic aggregation of preferences," Mathematical Social Sciences, Elsevier, vol. 9(1), pages 1-17, February.
    8. Donald Saari, 2006. "Which is better: the Condorcet or Borda winner?," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 26(1), pages 107-129, January.
    9. Andrea Saltelli, 2007. "Composite Indicators between Analysis and Advocacy," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 81(1), pages 65-77, March.
    10. James S. Weber, 2002. "How many voters are needed for paradoxes?," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 20(2), pages 341-355.
    11. Podinovskii, Vladislav V., 1994. "Criteria importance theory," Mathematical Social Sciences, Elsevier, vol. 27(3), pages 237-252, June.
    12. Bykvist, Krister, 2010. "Can Unstable Preferences Provide A Stable Standard Of Well-Being?," Economics and Philosophy, Cambridge University Press, vol. 26(01), pages 1-26, March.
    13. Truchon, Michel, 1998. "An Extension of the Concordet Criterion and Kemeny Orders," Cahiers de recherche 9813, Université Laval - Département d'économique.
    14. Ray, Paramesh, 1973. "Independence of Irrelevant Alternatives," Econometrica, Econometric Society, vol. 41(5), pages 987-991, September.
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    16. Sugden, Robert, 2010. "Opportunity As Mutual Advantage," Economics and Philosophy, Cambridge University Press, vol. 26(01), pages 47-68, March.
    17. Peyton Young, 1995. "Optimal Voting Rules," Journal of Economic Perspectives, American Economic Association, vol. 9(1), pages 51-64, Winter.
    18. Giuseppe Munda & Michela Nardo, 2009. "Noncompensatory/nonlinear composite indicators for ranking countries: a defensible setting," Applied Economics, Taylor & Francis Journals, vol. 41(12), pages 1513-1523.
    19. Kenneth J. Arrow & Herve Raynaud, 1986. "Social Choice and Multicriterion Decision-Making," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262511754, January.
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    Citations

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    Cited by:

    1. Giuseppe Munda, 2014. "On the Use of Shadow Prices for Sustainable Well-Being Measurement," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 118(2), pages 911-918, September.
    2. Débora Viana e Sousa Pereira & Caroline Maria de Miranda Mota, 2016. "Human Development Index Based on ELECTRE TRI-C Multicriteria Method: An Application in the City of Recife," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 125(1), pages 19-45, January.
    3. repec:eee:ejores:v:264:y:2018:i:2:p:491-507 is not listed on IDEAS
    4. Fabio Boncinelli & Leonardo Casini, 2014. "A Comparison of the Well-Being of Agricultural and Non Agricultural Households Using a Multicriterial Approach," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 119(1), pages 183-195, October.
    5. Débora Pereira & Caroline Mota, 2016. "Human Development Index Based on ELECTRE TRI-C Multicriteria Method: An Application in the City of Recife," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 125(1), pages 19-45, January.
    6. Santeramo, Fabio Gaetano, 2014. "On the composite indicators for food security: Decisions matter!," MPRA Paper 58955, University Library of Munich, Germany.
    7. Luzzati, T. & Gucciardi, G., 2015. "A non-simplistic approach to composite indicators and rankings: an illustration by comparing the sustainability of the EU Countries," Ecological Economics, Elsevier, vol. 113(C), pages 25-38.
    8. repec:rss:jnljee:v5i3p1 is not listed on IDEAS
    9. repec:spr:soinre:v:133:y:2017:i:2:d:10.1007_s11205-016-1374-6 is not listed on IDEAS
    10. Santeramo, Fabio Gaetano, 2016. "Methodological challenges in building composite indexes: Linking theory to practice," MPRA Paper 73276, University Library of Munich, Germany.

    More about this item

    Keywords

    Voting paradoxes; Multi-criteria decision analysis; Rational choice; C43; C82;

    JEL classification:

    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • C82 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Macroeconomic Data; Data Access

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