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Creating composite indicators with DEA and robustness analysis: the case of the technology achievement index

Journal Contribution - Journal Article

Composite indicators (CIs) are often used for benchmarking countries' performance, but they frequently stir controversies about the unavoidable subjectivity in their construction. Data Envelopment Analysis helps to overcome some key limitations, as it does not need any prior information on either the normalization of sub-indicators or on an agreed unique set of weights. Still, subjective decisions remain, and such modelling uncertainty propagates onto countries' CI scores and rankings. Uncertainty and sensitivity analysis are therefore needed to assess the robustness of the final outcome and to analyse how much each source of uncertainty contributes to the output variance. The current paper reports on these issues, using the Technology Achievement Index as an illustration. © 2008 Operational Research Society Ltd. All rights reserved.
Journal: Journal of the Operational Research Society
ISSN: 0160-5682
Issue: 2
Volume: 59
Pages: 239 - 251
Publication year:2008
BOF-publication weight:1
CSS-citation score:3
Authors from:Higher Education