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Composite Indices, Alternative Weights, and Comparison Robustness

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  • Suman Seth, Mark McGillivray

Abstract

Composite indices are widely used and can be highly influential. Yet most remain controversial owing to inter alia the arbitrary selection of component weights. Several studies have proposed testing the robustness of rankings generated by composite indices with respect to alternative weights but have not provided sufficient guidance on the choice of these alternatives. This paper proposes a holistic yet theoretically novel approach for selecting sets of alternatives weights and assessing comparison robustness that is applicable to linear composite indices with any finite number of dimensions. This approach is applied to robustness testing of inter-temporal country improvements generated by arguably the world's most influential composite development index, the UNDP Human Development Index (HDI). More than two-thirds of HDI country improvements between 1980 and 2013 were found to be not robust to the selected set of alternative weights.

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  • Suman Seth, Mark McGillivray, 2016. "Composite Indices, Alternative Weights, and Comparison Robustness," OPHI Working Papers 106, Queen Elizabeth House, University of Oxford.
    • Handle: RePEc:qeh:ophiwp:ophiwp106
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    Cited by:

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    2. Guido Kraemer & Markus Reichstein & Gustau Camps-Valls & Jeroen Smits & Miguel D. Mahecha, 2020. "The Low Dimensionality of Development," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 150(3), pages 999-1020, August.
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    4. Ricard Giné‐Garriga & Agustí Pérez‐Foguet, 2019. "Monitoring and targeting the sanitation poor: A multidimensional approach," Natural Resources Forum, Blackwell Publishing, vol. 43(2), pages 82-94, May.
    5. Mehmet Pinar & Thanasis Stengos & Nikolas Topaloglou, 2022. "Stochastic dominance spanning and augmenting the human development index with institutional quality," Annals of Operations Research, Springer, vol. 315(1), pages 341-369, August.
    6. Suman Seth & Gaston Yalonetzky, 2021. "Assessing Deprivation with an Ordinal Variable: Theory and Application to Sanitation Deprivation in Bangladesh," The World Bank Economic Review, World Bank, vol. 35(3), pages 793-811.
    7. Pinar, Mehmet & Stengos, Thanasis & Topaloglou, Nikolas, 2020. "On the construction of a feasible range of multidimensional poverty under benchmark weight uncertainty," European Journal of Operational Research, Elsevier, vol. 281(2), pages 415-427.
    8. Inaki Permanyer & Suman Seth & Gaston Yalonetzky, 2022. "Inequality measurement for bounded variables," Working Papers 602, ECINEQ, Society for the Study of Economic Inequality.

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