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Composite Indices: Rank Robustness, Statistical Association and Redundancy

Author

Listed:
  • James E. Foster

    () (Elliott School of International Affairs, George Washington University and the Oxford Poverty and Human Development Initiative (OPHI), Oxford Department of International Development, Queen Elizabeth House, University of Oxford Oxford. University of Oxford.)

  • Mark McGillivray

    () (Alfred Deakin Research Institute, Deakin University)

  • Suman Seth

    () (Department of International Development Oxford Poverty and Human Development Initiative (OPHI).)

Abstract

This paper evaluates the robustness of rankings obtained from composite indices that combine information from two or more components via a weighted sum. It examines the empirical prevalence of robust comparisons using the method proposed by Foster, McGillivray and Seth (2010). Indices examined are the Human Development Index, the Index of Economic Freedom and the Environmental Performance Index. Key theoretical results demonstrate links between the prevalence of robust comparisons, Kendall's tau rank correlation coefficient, and statistical association across components. Implications for redundancy among index components are also examined.

Suggested Citation

  • James E. Foster & Mark McGillivray & Suman Seth, 2011. "Composite Indices: Rank Robustness, Statistical Association and Redundancy," Working Papers 2011-19, The George Washington University, Institute for International Economic Policy.
  • Handle: RePEc:gwi:wpaper:2011-19
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    File URL: http://www.gwu.edu/~iiep/assets/docs/papers/Foster_IIEPWP2011-19.pdf
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    References listed on IDEAS

    as
    1. 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.
    2. Boland, Philip J. & Proschan, Frank, 1988. "Multivariate arrangement increasing functions with applications in probability and statistics," Journal of Multivariate Analysis, Elsevier, vol. 25(2), pages 286-298, May.
    3. Laurens Cherchye & Erwin Ooghe & Tom Puyenbroeck, 2008. "Robust human development rankings," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 6(4), pages 287-321, December.
    4. Mark McGillivray & Howard White, 1993. "Measuring development? The UNDP's human development index," Journal of International Development, John Wiley & Sons, Ltd., vol. 5(2), pages 183-192, March.
    5. Miles Cahill, 2005. "Is the Human Development Index Redundant?," Eastern Economic Journal, Eastern Economic Association, vol. 31(1), pages 1-5, Winter.
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    Citations

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    Cited by:

    1. Alkire, Sabina & Seth, Suman, 2015. "Multidimensional Poverty Reduction in India between 1999 and 2006: Where and How?," World Development, Elsevier, vol. 72(C), pages 93-108.
    2. Mariano Luque & Salvador Pérez-Moreno & Beatriz Rodríguez, 2016. "Measuring Human Development: A Multi-criteria Approach," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 125(3), pages 713-733, February.
    3. Sabina Alkire & James Foster, 2011. "Understandings and misunderstandings of multidimensional poverty measurement," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 9(2), pages 289-314, June.
    4. Athanassoglou, Stergios, 2013. "Multidimensional welfare rankings," MPRA Paper 51642, University Library of Munich, Germany.
    5. Zheng, Buhong & Zheng, Charles, 2015. "Fuzzy ranking of human development: A proposal," Mathematical Social Sciences, Elsevier, vol. 78(C), pages 39-47.
    6. DECANCQ, Koen & FLEURBAEY, Marc & SCHOKKAERT, Erik, 2014. "Inequality, income, and well-being," CORE Discussion Papers 2014018, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    7. Suman Seth & Antonio Villar, 2014. "The Measurement of Human Development and Poverty," Working Papers 14.10, Universidad Pablo de Olavide, Department of Economics.
    8. Stergios Athanassoglou, 2013. "Robust Multidimensional Welfare Comparisons: One Vector of Weights, One Vote," Working Papers 2013.40, Fondazione Eni Enrico Mattei.
    9. Stergios Athanassoglou, 2015. "Multidimensional welfare rankings under weight imprecision: a social choice perspective," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 44(4), pages 719-744, April.
    10. Permanyer, Iñaki, 2014. "Assessing individuals' deprivation in a multidimensional framework," Journal of Development Economics, Elsevier, vol. 109(C), pages 1-16.

    More about this item

    Keywords

    composite index; multidimensional index; Human Development Index; rank robustness; positive association; Kendall's tau; redundancy; prevalence function.;

    JEL classification:

    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • C02 - Mathematical and Quantitative Methods - - General - - - Mathematical Economics

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