The number of composite indices that are constructed and used internationally is growing very fast; but whilst the complexity of quantitative techniques has increased dramatically, the education and training in this area has been dragging and lagging behind. As a consequence, these simple numbers, expected to synthesize quite complex issues, are often presented to the public and used in the political debate without proper emphasis on their intrinsic limitations and correct interpretations.
In this course on global statistics, offered by the University of Geneva jointly with the ETH Zürich KOF, you will learn the general approach of constructing composite indices and some of resulting problems. We will discuss the technical properties, the internal structure (like aggregation, weighting, stability of time series), the primary data used and the variable selection methods. These concepts will be illustrated using a sample of the most popular composite indices. We will try to address not only statistical questions but also focus on the distinction between policy-, media- and paradigm-driven indicators.

From the lesson

Some introductory issues

This module contains four lessons. The first lesson is an introduction to CIs. It defines what a CI is, introduces their mathematical notation and reviews some core historical aspects of their development, the need and use of CIs. The second lesson focuses on the demand for CIs while the third lesson develops a qualitative framework for the construction of CIs. More specifically, the intrinsic quality of CIs is discussed by reviewing their pros and cons. Finally, the last lesson of this introductory module sketches the steps involved in the construction of a CI.
Learning outcomes: by the end of this module you will have a clear idea what a CI is (definition, ingredients, history, objective), know why it is needed and where it is used (needs and demand), be familiar with the quality requirements and have a first idea steps involved in the construction of a CI.