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Using composite indicators in econometric decision models: With application to occupational health

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  • Tanguiane, Andranick S.

Abstract

The paper explains the use of composite indicators as objective functions in econometric decision models. We consider an example of minimizing the harm from two kinds of pollution at the workplace, which can be reduced by two types of anti-pollution measures restricted to a given budget. At first, we define the pollution harm as a sum of two factors and find the optimal budget distribution to minimize it. Next, the harm is regarded as a probabilistic risk, and the cumulative effects from the interaction of two factors is taken into account. The corresponding indicator of the occupational hazard becomes a quadratic function, resulting in a different budget distribution. We also discuss the methodology of using composite indicators and refer to advanced methods of their construction.

Suggested Citation

  • Tanguiane, Andranick S., 2020. "Using composite indicators in econometric decision models: With application to occupational health," Working Paper Series in Economics 143, Karlsruhe Institute of Technology (KIT), Department of Economics and Management.
    • Handle: RePEc:zbw:kitwps:143
    DOI: 10.5445/IR/1000124748
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    References listed on IDEAS

    as
    1. Tangian, Andranik S., 2018. "Methodological notes on composite indicators for monitoring working conditions," Working Paper Series in Economics 118, Karlsruhe Institute of Technology (KIT), Department of Economics and Management.
    2. Frisch, Ragnar, 1981. "From Utopian Theory to Practical Applications: The Case of Econometrics," American Economic Review, American Economic Association, vol. 71(6), pages 1-16, Special I.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    occupational health; occupational hazard; composite indicators; objective functions; multiple criteria decision making; decision support aid; budgeting;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling

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