IDEAS home Printed from https://ideas.repec.org/a/spr/soinre/v122y2015i3p635-652.html
   My bibliography  Save this article

Non-compensability in Composite Indicators: A Robust Directional Frontier Method

Author

Listed:
  • Francesco Vidoli
  • Elisa Fusco
  • Claudio Mazziotta

Abstract

This paper follows the research mainstream aimed to link the efficiency frontier approaches and the composite indicators (CI) methods. More in detail, the main drawbacks of the CI methods based on Benefit of the Doubt (BoD) approach are the sensitivity to the outliers, the perfect compensability and the lack of consideration about the marginal rate of substitution between simple indicators. Following Simar and Vanhems (J Econ 166(2):342–354, 2012 ) results, we propose a weighting method that bypassing all previous shortcomings suggests a comprehensive approach to construct robust and non-compensatory composite indicators. This approach is based on the integration of BoD by a directional distance function. In order to better highlight the advantages and limitations of our approach we present two applications: in the first one we test our approach on simulated data, while in the second one we consider the supply level of the Italian national health service with the aim to analyse the regional differences and verify the robustness of the results. Copyright Springer Science+Business Media Dordrecht 2015

Suggested Citation

  • Francesco Vidoli & Elisa Fusco & Claudio Mazziotta, 2015. "Non-compensability in Composite Indicators: A Robust Directional Frontier Method," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 122(3), pages 635-652, July.
    • Handle: RePEc:spr:soinre:v:122:y:2015:i:3:p:635-652
    DOI: 10.1007/s11205-014-0710-y
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/s11205-014-0710-y
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s11205-014-0710-y?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Paolo Paruolo & Michaela Saisana & Andrea Saltelli, 2013. "Ratings and rankings: voodoo or science?," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 176(3), pages 609-634, June.
    2. Kristof De Witte & Chris Van Klaveren, 2014. "How are teachers teaching? A nonparametric approach," Education Economics, Taylor & Francis Journals, vol. 22(1), pages 3-23, February.
    3. Simar, Léopold & Vanhems, Anne, 2012. "Probabilistic characterization of directional distances and their robust versions," Journal of Econometrics, Elsevier, vol. 166(2), pages 342-354.
    4. P.C. Smith, 2002. "Measuring health system performance," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 3(3), pages 145-148, September.
    5. 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.
    6. Knox Lovell, C. A., 1995. "Measuring the macroeconomic performance of the Taiwanese economy," International Journal of Production Economics, Elsevier, vol. 39(1-2), pages 165-178, April.
    7. Cinzia Daraio & Léopold Simar, 2005. "Introducing Environmental Variables in Nonparametric Frontier Models: a Probabilistic Approach," Journal of Productivity Analysis, Springer, vol. 24(1), pages 93-121, September.
    8. Sahoo, Biresh K. & Luptacik, Mikulas & Mahlberg, Bernhard, 2011. "Alternative measures of environmental technology structure in DEA: An application," European Journal of Operational Research, Elsevier, vol. 215(3), pages 750-762, December.
    9. Knox Lovell, C. A. & Pastor, Jesus T. & Turner, Judi A., 1995. "Measuring macroeconomic performance in the OECD: A comparison of European and non-European countries," European Journal of Operational Research, Elsevier, vol. 87(3), pages 507-518, December.
    10. N. A. Campbell, 1980. "Robust Procedures in Multivariate Analysis I: Robust Covariance Estimation," Journal of the Royal Statistical Society Series C, Royal Statistical Society, vol. 29(3), pages 231-237, November.
    11. 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.
    12. Charnes, A. & Cooper, W. W. & Rhodes, E., 1978. "Measuring the efficiency of decision making units," European Journal of Operational Research, Elsevier, vol. 2(6), pages 429-444, November.
    13. Cherchye, Laurens & Knox Lovell, C.A. & Moesen, Wim & Van Puyenbroeck, Tom, 2007. "One market, one number? A composite indicator assessment of EU internal market dynamics," European Economic Review, Elsevier, vol. 51(3), pages 749-779, April.
    14. Kristof DE WITTE & Nicky ROGGE, 2009. "Accounting for exogenous influences in a benevolent performance evaluation of teachers," Working Papers of Department of Economics, Leuven ces09.13, KU Leuven, Faculty of Economics and Business (FEB), Department of Economics, Leuven.
    15. Bellenger, Moriah J. & Herlihy, Alan T., 2009. "An economic approach to environmental indices," Ecological Economics, Elsevier, vol. 68(8-9), pages 2216-2223, June.
    16. A Zanella & A S Camanho & T G Dias, 2013. "Benchmarking countries’ environmental performance," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 64(3), pages 426-438, March.
    17. Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64(5), pages 416-416.
    18. Angel Prieto & José ZofIo, 2001. "Evaluating Effectiveness in Public Provision of Infrastructure and Equipment: The Case of Spanish Municipalities," Journal of Productivity Analysis, Springer, vol. 15(1), pages 41-58, January.
    19. Laurens Cherchye & Wim Moesen & Tom Van Puyenbroeck, 2004. "Legitimately Diverse, yet Comparable: On Synthesizing Social Inclusion Performance in the EU," Journal of Common Market Studies, Wiley Blackwell, vol. 42(5), pages 919-955, December.
    20. Soonman Kwon, 2003. "Health and Health Care," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 62(1), pages 171-186, April.
    21. Rogge, Nicky, 2012. "Undesirable specialization in the construction of composite policy indicators: The Environmental Performance Index," Working Papers 2012/08, Hogeschool-Universiteit Brussel, Faculteit Economie en Management.
    22. Despotis, D.K., 2005. "Measuring human development via data envelopment analysis: the case of Asia and the Pacific," Omega, Elsevier, vol. 33(5), pages 385-390, October.
    23. Pasquale De Muro & Matteo Mazziotta & Adriano Pareto, 2011. "Composite Indices of Development and Poverty: An Application to MDGs," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 104(1), pages 1-18, October.
    24. Jenni P䤫könen & Timo T. Sepp䬤, 2014. "Using composite indicators to evaluate the efficiency of health care system," Applied Economics, Taylor & Francis Journals, vol. 46(19), pages 2242-2250, July.
    25. Zhou, P. & Ang, B.W. & Poh, K.L., 2007. "A mathematical programming approach to constructing composite indicators," Ecological Economics, Elsevier, vol. 62(2), pages 291-297, April.
    26. Laurens Cherchye, 2001. "Using data envelopment analysis to assess macroeconomic policy performance," Applied Economics, Taylor & Francis Journals, vol. 33(3), pages 407-416.
    27. Cazals, Catherine & Florens, Jean-Pierre & Simar, Leopold, 2002. "Nonparametric frontier estimation: a robust approach," Journal of Econometrics, Elsevier, vol. 106(1), pages 1-25, January.
    28. D K Despotis, 2005. "A reassessment of the human development index via data envelopment analysis," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 56(8), pages 969-980, August.
    29. Storrie, Donald & Bjurek, Hans, 2000. "Benchmarking European labour market performance with efficiency frontier techniques," Discussion Papers, Research Unit: Labor Market Policy and Employment FS I 00-211, WZB Berlin Social Science Center.
    30. Fusco, Elisa, 2015. "Enhancing non-compensatory composite indicators: A directional proposal," European Journal of Operational Research, Elsevier, vol. 242(2), pages 620-630.
    31. Takamura, Yoshiharu & Tone, Kaoru, 2003. "A comparative site evaluation study for relocating Japanese government agencies out of Tokyo," Socio-Economic Planning Sciences, Elsevier, vol. 37(2), pages 85-102, June.
    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. Fusco, Elisa & Maggi, Bernardo & Rizzuto, Livia, 2022. "Alternative indicators for the evaluation of renewables in Europe: An efficiency approach," Renewable Energy, Elsevier, vol. 190(C), pages 48-65.
    2. Fabio Pammolli & Francesco Porcelli & Francesco Vidoli & Guido Borà, 2014. "La spesa sanitaria delle Regioni in Italia - Saniregio 3," Working Papers CERM 02-2014, Competitività, Regole, Mercati (CERM).
    3. Fabio Pammolli & Francesco Porcelli & Francesco Vidoli & Monica Auteri & Guido Borà, 2017. "La spesa sanitaria delle Regioni in Italia - Saniregio2017," Working Papers CERM 01-2017, Competitività, Regole, Mercati (CERM).
    4. Fabio Pammolli & Francesco Porcelli & Francesco Vidoli & Guido Borà, 2015. "La spesa sanitaria delle Regioni in Italia - Saniregio 2015," Working Papers CERM 01-2015, Competitività, Regole, Mercati (CERM), revised 04 Jan 2016.
    5. Salvatore Greco & Alessio Ishizaka & Menelaos Tasiou & Gianpiero Torrisi, 2019. "On the Methodological Framework of Composite Indices: A Review of the Issues of Weighting, Aggregation, and Robustness," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 141(1), pages 61-94, January.
    6. Fusco, Elisa & Vidoli, Francesco & Sahoo, Biresh K., 2018. "Spatial heterogeneity in composite indicator: A methodological proposal," Omega, Elsevier, vol. 77(C), pages 1-14.
    7. Fusco, Elisa, 2015. "Enhancing non-compensatory composite indicators: A directional proposal," European Journal of Operational Research, Elsevier, vol. 242(2), pages 620-630.
    8. Byeong U. Park & Léopold Simar & Valentin Zelenyuk, 2013. "Non-Parametric Approach to Dynamic Time Series Discrete Choice Models," CEPA Working Papers Series WP092013, School of Economics, University of Queensland, Australia.
    9. Amado, Carla A.F. & São José, José M.S. & Santos, Sérgio P., 2016. "Measuring active ageing: A Data Envelopment Analysis approach," European Journal of Operational Research, Elsevier, vol. 255(1), pages 207-223.
    10. Sahoo, Biresh K. & Acharya, Debashis, 2010. "An alternative approach to monetary aggregation in DEA," European Journal of Operational Research, Elsevier, vol. 204(3), pages 672-682, August.
    11. Sahoo, Biresh K. & Singh, Ramadhar & Mishra, Bineet & Sankaran, Krithiga, 2017. "Research productivity in management schools of India during 1968-2015: A directional benefit-of-doubt model analysis," Omega, Elsevier, vol. 66(PA), pages 118-139.
    12. Kristof Witte & Nicky Rogge, 2010. "To publish or not to publish? On the aggregation and drivers of research performance," Scientometrics, Springer;Akadémiai Kiadó, vol. 85(3), pages 657-680, December.
    13. L Cherchye & W Moesen & N Rogge & T Van Puyenbroeck & M Saisana & A Saltelli & R Liska & S Tarantola, 2008. "Creating composite indicators with DEA and robustness analysis: the case of the Technology Achievement Index," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 59(2), pages 239-251, February.
    14. Karagiannis, Giannis & Knox Lovell, C.A., 2016. "Productivity measurement in radial DEA models with a single constant input," European Journal of Operational Research, Elsevier, vol. 251(1), pages 323-328.
    15. Rogge, Nicky & De Jaeger, Simon & Lavigne, Carolien, 2017. "Waste Performance of NUTS 2-regions in the EU: A Conditional Directional Distance Benefit-of-the-Doubt Model," Ecological Economics, Elsevier, vol. 139(C), pages 19-32.
    16. Rogge, Nicky & Archer, Geoffrey, 2021. "Measuring and analyzing country change in establishing ease of doing business using a revised version of World Bank's ease of doing business index," European Journal of Operational Research, Elsevier, vol. 290(1), pages 373-385.
    17. Van Puyenbroeck, Tom & Rogge, Nicky, 2017. "Geometric mean quantity index numbers with Benefit-of-the-Doubt weights," European Journal of Operational Research, Elsevier, vol. 256(3), pages 1004-1014.
    18. H. K. Millington & J. E. Lovell & C. A. K. Lovell, 2013. "Using Fieldwork, GIS and DEA to Guide Management of Urban Stream Health," CEPA Working Papers Series WP072013, School of Economics, University of Queensland, Australia.
    19. Laurens CHERCHYE & Willem MOESEN & Nicky ROGGE & Tom VAN PUYENBROECK, 2009. "Constructing a knowledge economy composite indicator with imprecise data," Working Papers of Department of Economics, Leuven ces09.15, KU Leuven, Faculty of Economics and Business (FEB), Department of Economics, Leuven.
    20. Gulati, Rachita & Charles, Vincent & Kumar, Sunil, 2024. "School education development index: A meta-frontier range directional measure benefit-of-the-doubt model," Socio-Economic Planning Sciences, Elsevier, vol. 92(C).

    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:spr:soinre:v:122:y:2015:i:3:p:635-652. 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: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.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.