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The Importance of Variables in Composite Indices: A Contribution to the Methodology and Application to Development Indices

  • Martin SchlossarekEmail author
  • Miroslav Syrovátka
  • Ondřej Vencálek
Article
  • 22 Downloads

Abstract

The paper examines the issue of weights and importance in composite indices of development. Building a composite index involves several steps, one of them being the weighting of variables. The nominal weight assigned to a variable often differs from the degree to which the variable affects the scores of the overall index. The newly suggested notion of importance is based on the idea that an important indicator, if omitted from the index, causes large changes in countries’ results. We propose a method of measuring the importance and apply it to inequality variables in composite indices of development. The results show a low importance for most inequality variables, and for some of them, a large discrepancy between the nominal weights and the importance. We argue that the importance of variables should be considered in the process of index construction. This may imply a modification of the index when there is a large discrepancy between the nominal weights and importance and when the importance of some variables is extremely low. Whether any such modification is justified must be decided within the context of the particular index.

Keywords

Composite indicator Composite index Importance Weighting Development indicator Inequality 

Abbreviations

CDI

Commitment to Development Index

EPI

Environmental Performance Index

HDI

Human Development Index

IAH

Index of Inequality-Adjusted Happiness

IEWB

Index of Economic Well-being

IHDI

Inequality-adjusted Human Development Index

MAI

Measure of absolute importance

MCI

Modified composite index

MRI

Measure of relative importance

OCI

Original composite index

PCA

Principal component analysis

OECD

Organisation for Economic Co-operation and Development

SSI/HW

Sustainable Society Index/Human Well-being component

UNDP

United Nations Development Programme

WHI/QL

World Happiness Index/Quality of Life component

Notes

Funding

Funding was provided by Univerzita Palackého v Olomouci (Grant No. IGA_PrF_2019_025).

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Copyright information

© Springer Nature B.V. 2019

Authors and Affiliations

  1. 1.Department of Development and Environmental StudiesPalacký University OlomoucOlomoucCzech Republic
  2. 2.Department of Mathematical Analysis and Applications of MathematicsPalacký University OlomoucOlomoucCzech Republic

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