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Issues in Composite Index Construction

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The Well-Being of America's Children

Part of the book series: Children’s Well-Being: Indicators and Research ((CHIR,volume 6))

Abstract

How can summary or composite indices of the quality of life (QOL) or well-being (W-B) of children and youths be best constructed so as to effectively measure trends over time and/or comparisons among subpopulations, states, regions, or nations? Most generally, in order to make judgments about trends in the W-B of children and youths, an individual must, at least informally, engage in the following activities: (1) select a set of indicators that are important to her or him, (2) obtain data from social reports or other news sources on the progress of those indicators, and (3) integrate those indicators across disparate domains to achieve a judgment of overall progress on children’s overall W-B.

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Notes

  1. 1.

    As research progresses, this model may be modified to include substitutability or complementarity between social indicators that would require modeling interactions among indicators. For example, an individual with higher average income may consider life expectancy more important than an individual with very low income (as life becomes more “worth living,” longer life may be more valuable).

  2. 2.

    The reason for negative correlations is due in part to “restriction of range” problems (e.g., life expectancy varied far less in the USA since 1970 than it does in a cross-sectional sample of nations, where Somalia has a life expectancy of only 40 years.) Negative correlations are also due to preferences of individual nations. For example, the USA seems to prefer higher GDP/capita at the expense of some loss in equality, compared to European nations. Such a policy could result in negative correlation between these indicators as inequality is pushed up in order to gain GDP/capita.

  3. 3.

    In fact, if an indicator is as highly polarized as abortion, we recommend that it not be included in a composite index because it decreases the chance of agreement, though it should be included in the social report.

  4. 4.

    A general definition of a minimax estimator in statistics is that it is an estimator that minimizes the maximum risk where risk is defined as the average loss or discrepancy between a parameter to be estimated and the statistical estimator used to estimate the parameter (Wasserman 2004, p. 197). For the equal-weight method of estimating a composite well-being function, the discrepancies measure disagreements of individuals on the weights to be used. The minimax property then refers to a minimization of extreme disagreements on the weights.

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Correspondence to Michael R. Hagerty .

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Hagerty, M.R., Land, K.C. (2012). Issues in Composite Index Construction. In: Land, K. (eds) The Well-Being of America's Children. Children’s Well-Being: Indicators and Research, vol 6. Springer, Dordrecht. https://doi.org/10.1007/978-94-007-4092-1_6

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