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An Unbalance Adjustment Method for Development Indicators

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  • Enrico Casadio Tarabusi
  • Giulio Guarini

Abstract

This paper analyzes some aggregation aspects of the procedure for constructing a composite index on a multidimensional socio-economic phenomenon such as development, the main focus being on the unbalance among individual dimensions. First a theoretical framework is set up for the unbalance adjustment of the index. Then an aggregation function is proposed that takes unbalance among development dimensions into account; a separate index is also introduced that measures the unbalance itself. Finally the dataset of the Index of African Governance for the year 2007 is used to test this method and compare it against the weighted arithmetic mean of variables with relation to the measured values of unbalance, yielding significantly different results for ratings and rankings, which in addition show negative correlations with the unbalance adjustment values. The changes ensuing from the adjustment are commented for some countries. Copyright Springer Science+Business Media B.V. 2013

Suggested Citation

  • Enrico Casadio Tarabusi & Giulio Guarini, 2013. "An Unbalance Adjustment Method for Development Indicators," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 112(1), pages 19-45, May.
    • Handle: RePEc:spr:soinre:v:112:y:2013:i:1:p:19-45
    DOI: 10.1007/s11205-012-0070-4
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    References listed on IDEAS

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    More about this item

    Keywords

    Development; Rating; Composite indicator; Aggregation method; Across-variables unbalance; Across-variables compensability; Index of African Governance; O15; C43;
    All these keywords.

    JEL classification:

    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation

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