Constructing a composite indicator with multiplicative aggregation under the objective of ranking alternatives

Abstract

Composite indicators (CIs), constructed on the basis of the ‘benefit of the doubt’ criterion, are characterized by endogenously determined vectors of weights. In this paper, a new procedure to construct CIs is proposed in an attempt to overcome the main weakness of this family of procedures: the determination of an individual weighting vector for each alternative, which makes comparisons between alternatives difficult and the existence of multiple ties. A new procedure is proposed which, while maintaining the essence of DEA-inspired procedures determines a common weighting vector to evaluate the complete set of alternatives and includes the discrimination between alternatives as an objective of the procedure.

Keywords:

• composite indicators
• DEA
• multiplicative aggregation
• ranking

Acknowledgements

The authors are grateful to the anonymous referees for their contribution in improving the quality of this paper. This research has been partially supported by the projects SEJ‐7782 of Consejeria de Innovacion de la Junta de Andalucia and ECO2011‐29801‐C02‐02 of Ministry of Science and Innovation.