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The weighting role of normalisation in a multidimensional analysis of Social Inclusion

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  • Ludovico Carrino

    () (Department of Economics, University Of Venice C� Foscari)

Abstract

In the context of the multidimensional measurement of complex phenomena, the major focus of the recent literature has been on the choice of the dimensions� weights and the shape of the aggregation function, while few studies have concentrated on how normalisation influences the results. With the aim of building a measure of Social Inclusion for European regions between 2004 and 2012, we adopt a CES aggregation framework and compare two alternative normalisation strategies: a data-driven min-max function, where the parameters depends solely on the available data, and an expert-based function where parameters are elicited through a survey at the University of Venice Ca� Foscari. Regardless of the adopted strategy, we show that normalisation plays a crucial part in defining variables� weighting and trade-offs. The data-driven strategy produces trade-offs that are hard to interpret in economic terms and debatable from a social desirability perspective, thus generating an aggregate measure with a �positive� interpretation. Moreover, it softens the aftermaths of the recent economic crisis on Social Inclusion, by putting a consistent weight on the longevity variable. Conversely, the expert-based normalisation has strikingly different parameters and allows for a normative interpretation of the resulting index. Furthermore, it emphasizes the worsening trends in long- term unemployment and the relevance of early school leaving in the Social Inclusion measure. As a result, numerous rank-reversals occur between regions when switching the normalisation methods.

Suggested Citation

  • Ludovico Carrino, 2015. "The weighting role of normalisation in a multidimensional analysis of Social Inclusion," Working Papers 2015:32, Department of Economics, University of Venice "Ca' Foscari".
  • Handle: RePEc:ven:wpaper:2015:32
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    References listed on IDEAS

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    More about this item

    Keywords

    CES; normalisation; aggregation; weighting; experts; multidimensionality; Social Inclusion;

    JEL classification:

    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • C83 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Survey Methods; Sampling Methods
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty

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