Title: Tools for Composite Indicators Building
Publication Year: 2005
JRC N°: JRC31473
Other Identifiers: EUR 21682 EN
URI: http://publications.jrc.ec.europa.eu/repository/handle/JRC31473
Type: EUR - Scientific and Technical Research Reports
Abstract: Our society is changing so fast we need to know as soon as possible when things go wrong (Euroabstracts, 2003). This is where composite indicators enter into the discussion. A composite indicator is an aggregated index comprising individual indicators and weights that commonly represent the relative importance of each indicator. However, the construction of a composite indicator is not straightforward and the methodological challenges raise a series of technical issues that, if not addressed adequately, can lead to composite indicators being misinterpreted or manipulated. Therefore, careful attention needs to be given to their construction and subsequent use. This document reviews the steps involved in a composite indicator’s construction process and discusses the common pitfalls to be avoided. We stress the need for multivariate analysis prior to the aggregation of the individual indicators. We deal with the problem of missing data and with the techniques used to bring into a common unit the indicators that are of very different nature. We explore different methodologies for weighting and aggregating indicators into a composite and test the robustness of the composite using uncertainty and sensitivity analysis. Finally we show how the same information that is communicated by the composite indicator can be presented in very different ways and how this can influence the policy message.
JRC Directorate:Space, Security and Migration

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