IDEAS home Printed from https://ideas.repec.org/a/gam/jmathe/v12y2024i13p2019-d1425306.html
   My bibliography  Save this article

A Rate of Change and Center of Gravity Approach to Calculating Composite Indicator Thresholds: Moving from an Empirical to a Theoretical Perspective

Author

Listed:
  • Claudio Garuti

    (Fulcrum Ingenieria Ltd., Luis Thayer Ojeda, Santiago 0180, Chile)

  • Enrique Mu

    (Department of Business Management, Accounting & Ethics, Carlow University, Pittsburgh, PA 15213, USA)

Abstract

A composite indicator (CI) is the mathematical aggregation of sub-dimension (local) indicators used to provide an overall score for the multidimensional concept being measured. CIs are widely used to assess the benefits or risks in human endeavors, such as by creating life satisfaction indices or disaster risk indicators. One important aspect of the development of CIs is setting up value thresholds for taking action, such as in determining the minimum acceptable level of life satisfaction in a community or the maximum acceptable flood risk value beyond which people should be ordered to evacuate from the area in danger. The analytic hierarchy/network process (AHNP) is widely used for the development of CIs. In a review of 111 AHP/ANP CI studies, fewer than 10% discussed any threshold. This means that about 90% of the developed CIs were theoretically sound but lacked the actionable thresholds necessary to be of practical use. Furthermore, for the few studies that set thresholds, the values were typically set arbitrarily or using inadequate statistical approaches. To address this important concern, this study first discusses the most commonly used approaches to setting up thresholds, as well as their inadequacies, and proposes the development of AHP/ANP CI thresholds using a mathematical approach based on the rate of change and center of gravity (RCCG) concepts. Using this approach, a virtual reference alternative, i.e., a threshold profile (TP) made up of the local thresholds of each indicator, is calculated. The key advantage of the proposed method is that it not only provides a non-arbitrary way to set up a CI threshold; more importantly, it is independent of the data and/or alternatives to be evaluated; that is, a threshold calculated with the proposed approach constitutes an absolute reference value, outside the dataset.

Suggested Citation

  • Claudio Garuti & Enrique Mu, 2024. "A Rate of Change and Center of Gravity Approach to Calculating Composite Indicator Thresholds: Moving from an Empirical to a Theoretical Perspective," Mathematics, MDPI, vol. 12(13), pages 1-40, June.
  • Handle: RePEc:gam:jmathe:v:12:y:2024:i:13:p:2019-:d:1425306
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2227-7390/12/13/2019/pdf
    Download Restriction: no

    File URL: https://www.mdpi.com/2227-7390/12/13/2019/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Aguilar-Rivera, Noé, 2019. "A framework for the analysis of socioeconomic and geographic sugarcane agro industry sustainability," Socio-Economic Planning Sciences, Elsevier, vol. 66(C), pages 149-160.
    2. Carmen Corona-Sobrino & Mónica García-Melón & Rocio Poveda-Bautista & Hannia González-Urango, 2020. "Closing the gender gap at academic conferences: A tool for monitoring and assessing academic events," PLOS ONE, Public Library of Science, vol. 15(12), pages 1-23, December.
    3. Dun-Sol Go & Young-Eun Kim & Seok-Jun Yoon, 2020. "Development of the Korean Community Health Determinants Index (K-CHDI)," PLOS ONE, Public Library of Science, vol. 15(10), pages 1-11, October.
    4. Giuseppe Munda, 2008. "Social Multi-Criteria Evaluation for a Sustainable Economy," Springer Books, Springer, number 978-3-540-73703-2, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jose Antonio Fernández Gallardo & Jose María Caridad y Ocerín & María Genoveva Millán Vázquez de la Torre, 2019. "Evaluation of the Reception Capacity of a Certain Area Regarding Tourist Housing, Addressing Sustainable-Tourism Criteria," Sustainability, MDPI, vol. 11(22), pages 1-19, November.
    2. Lars Carlsen, 2024. "Sustainability: An Ethical Challenge: The Overexploitation of the Planet as an Exemplary Case," Sustainability, MDPI, vol. 16(8), pages 1-16, April.
    3. Del Corso, Jean-Pierre & Kephaliacos, Charilaos & Plumecocq, Gaël, 2015. "Legitimizing farmers' new knowledge, learning and practices through communicative action: Application of an agro-environmental policy," Ecological Economics, Elsevier, vol. 117(C), pages 86-96.
    4. Francis Marleau Donais & Irène Abi-Zeid & E. Owen D. Waygood & Roxane Lavoie, 2021. "A Framework for Post-Project Evaluation of Multicriteria Decision Aiding Processes from the Stakeholders’ Perspective: Design and Application," Group Decision and Negotiation, Springer, vol. 30(5), pages 1161-1191, October.
    5. Victoria Vicario-Modroño & Rosa Gallardo-Cobos & Pedro Sánchez-Zamora, 2023. "Sustainability evaluation of olive oil mills in Andalusia (Spain): a study based on composite indicators," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 25(7), pages 6363-6392, July.
    6. Catarina Roseta‐Palma & Yiğit Sağlam, 2019. "Downside risk in reservoir management," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 63(2), pages 328-353, April.
    7. Zepharovich, Elena & Ceddia, M. Graziano & Rist, Stephan, 2021. "Social multi-criteria evaluation of land-use scenarios in the Chaco Salteño: Complementing the three-pillar sustainability approach with environmental justice," Land Use Policy, Elsevier, vol. 101(C).
    8. Gorsevski, Pece V. & Cathcart, Steven C. & Mirzaei, Golrokh & Jamali, Mohsin M. & Ye, Xinyue & Gomezdelcampo, Enrique, 2013. "A group-based spatial decision support system for wind farm site selection in Northwest Ohio," Energy Policy, Elsevier, vol. 55(C), pages 374-385.
    9. Tommaso Luzzati & Bruno Cheli & S. Arcuri, 2014. "Measuring the sustainability performances of the Italian regions," Discussion Papers 2014/187, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
    10. Vincent Van Roy & Daniel Nepelski, 2018. "Validation of the Innovation Radar assessment framework," JRC Research Reports JRC110926, Joint Research Centre.
    11. Saisana, Michaela & d'Hombres, Béatrice & Saltelli, Andrea, 2011. "Rickety numbers: Volatility of university rankings and policy implications," Research Policy, Elsevier, vol. 40(1), pages 165-177, February.
    12. Tommaso Luzzati & Bruno Cheli & Gianluca Gucciardi, 2017. "Communicating the uncertainty of synthetic indicators: a reassessment of the HDI ranking," Discussion Papers 2017/228, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
    13. Joanna Jaroszewicz & Anna Majewska, 2021. "Group Spatial Preferences of Residential Locations—Simplified Method Based on Crowdsourced Spatial Data and MCDA," Sustainability, MDPI, vol. 13(9), pages 1-24, April.
    14. Fikret Adaman & Yahya M. Madra, 2012. "Understanding Neoliberalism as Economization: The Case of the Ecology," Working Papers 2012/04, Bogazici University, Department of Economics.
    15. Andonegi, Aitor & Garmendia, Eneko & Aldezabal, Arantza, 2021. "Social multi-criteria evaluation for managing biodiversity conservation conflicts," Land Use Policy, Elsevier, vol. 109(C).
    16. Alexis Tsoukiàs & Gilberto Montibeller & Giulia Lucertini & Valérie Belton, 2013. "Policy Analytics: An Agenda for Research and Practice," Working Papers hal-00874307, HAL.
    17. Walther Zeug & Alberto Bezama & Urs Moesenfechtel & Anne Jähkel & Daniela Thrän, 2019. "Stakeholders’ Interests and Perceptions of Bioeconomy Monitoring Using a Sustainable Development Goal Framework," Sustainability, MDPI, vol. 11(6), pages 1-24, March.
    18. Marek Walesiak & Grażyna Dehnel, 2023. "A Measurement of Social Cohesion in Poland’s NUTS2 Regions in the Period 2010–2019 by Applying Dynamic Relative Taxonomy to Interval-Valued Data," Sustainability, MDPI, vol. 15(4), pages 1-21, February.
    19. Carayannis, Elias G. & Grigoroudis, Evangelos & Wurth, Bernd, 2022. "OR for entrepreneurial ecosystems: A problem-oriented review and agenda," European Journal of Operational Research, Elsevier, vol. 300(3), pages 791-808.
    20. Kolinjivadi, Vijay & Gamboa, Gonzalo & Adamowski, Jan & Kosoy, Nicolás, 2015. "Capabilities as justice: Analysing the acceptability of payments for ecosystem services (PES) through ‘social multi-criteria evaluation’," Ecological Economics, Elsevier, vol. 118(C), pages 99-113.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jmathe:v:12:y:2024:i:13:p:2019-:d:1425306. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.