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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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    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. James Foster & Mark McGillivray & Suman Seth, 2009. "Rank Robustness of Composite Indices," OPHI Working Papers 26, Queen Elizabeth House, University of Oxford.
    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. Sabina Alkire, James Foster, 2010. "Designing the Inequality-Adjusted Human Development Index (HDI)," OPHI Working Papers 37, Queen Elizabeth House, University of Oxford.
    6. 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.
    7. Miles Cahill, 2005. "Is the Human Development Index Redundant?," Eastern Economic Journal, Eastern Economic Association, vol. 31(1), pages 1-5, Winter.
    8. Koen Decancq & María Ana Lugo, 2013. "Weights in Multidimensional Indices of Wellbeing: An Overview," Econometric Reviews, Taylor & Francis Journals, vol. 32(1), pages 7-34, January.
    9. 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.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

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

    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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