POSET Analysis of Panel Data with POSAC

Abstract

In the last two decades, data-driven policymaking has gained more and more importance due to the larger availability of data (and, more recently, Big Data) for designing proper and timely economic and social policies. This larger availability of data has let decision makers have a deeper insight of complex socio-economic phenomena (e.g. unemployment, deprivation, crime, social care, healthcare) but, at the same time, it has drastically increased the number of indicators that can be used to monitor these phenomena. Decision makers are now often in the condition of taking decisions with large batteries of indicators whose interpretation is not always easy or concordant. In order to simplify the decisional process, a large body of literature suggests to use synthetic indicators to produce single measures of vast, latent phenomena underlying groups of indicators. Unfortunately, although simple, this solution has a number of drawbacks (e.g. compensation between components of synthetic indicators could be undesirable; subjective weighting of the components could lead to arbitrary results; mixing information about different phenomena could make interpretation harder and decision-making opaque). Moreover, with operational decisions, it is necessary to distinguish between those situations when decisions can be embedded in automated processes, and those that require human intervention. Under certain conditions, the use of synthetic indicators may bring to a misleading interpretation of the real world and to wrong policy decisions. In order to overcome all these limitations and drawbacks of synthetic indicators, the use of multi-indicator systems is becoming more and more important to describe and characterize many phenomena in every field of science, as they keep the valuable information, inherent to each indicator, distinct (see, for a review: Bruggemann and Patil 2011).