Please use this identifier to cite or link to this item: https://www.um.edu.mt/library/oar/handle/123456789/61612
Title: Conceptual and practical issues in constructing composite indices
Other Titles: Small states and the pillars of economic resilience
Authors: Farrugia, Nadia
Keywords: Conceptualism
Economic development -- Case studies
Macroeconomics -- Case studies
States, Small -- Economic conditions
States, Small -- Economic aspects
Issue Date: 2008
Publisher: University of Malta. Islands and Small States Institute & The Commonwealth Secretariat
Citation: Farrugia, N. (2008). Conceptual and practical issues in constructing composite indices. In L. Briguglio, G. Cordina, N Farrugia, & C. Vigilance (Eds.), Small states and the pillars of economic resilience (pp. 361-384). Msida: University of Malta. Islands and Small States Institute & London: The Commonwealth Secretariat
Abstract: This chapter presents an analysis of the conceptual issues associated with the construction of composite indices. Composite indices, which are constructed by averaging a number of indicators or sub-indices, are multi-dimensional, in that they represent aggregate measures of a combination of factors. They are often used to simplify complex measurement constructs, and often have a strong political appeal due to the fact that they simplify complex matters into a single number. However, composite indices are often criticised for their subjectivity. Indeed the methodology used to construct an index generates considerable debate on various aspects, such as the weighting method used, possible correlation among the different sub-indices, missing variables, standardisation procedures and others. This paper will attempt to propose some desirable criteria for the construction of composite indices, including simplicity, ease of comprehension, and coverage issues and transparency. It will also discuss a number of methodological considerations including weighting.
URI: https://www.um.edu.mt/library/oar/handle/123456789/61612
ISBN: 978-99909-49-24-7
Appears in Collections:Small states and the pillars of economic resilience

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