Handbook on Constructing Composite Indicators: Methodology by OECD Organisation for Economic Co-operation and Develop

By OECD Organisation for Economic Co-operation and Develop

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Extra resources for Handbook on Constructing Composite Indicators: Methodology and User Guide

Sample text

In percentage points with respect to the previous year or a number of past years, c) indexed levels and d) indexed growth rates. When indexed, the values of the indicator are linearly transformed so that their indexed value for a given year is 100 (or another integer). The price level index shows values such that EU27=100 for each year, with more expensive countries having values greater than 100 and less expensive countries below 100 (Figure 8). Trends in country performance as revealed through a composite indicator can be presented through trend diagrams.

A TOOLBOX FOR CONSTRUCTORS A number of statistical methods are discussed in detail below to provide constructors with the necessary tools for building sound composite indicators, focusing on the practical implementation of the steps 3 to 8 outlined above. The problem of missing data is discussed first. The need for multivariate analysis prior to the aggregation of the individual indicators is stressed. The techniques used to standardise indicators of disparate natures into a common unit are also presented.

The underlying individual indicators can also be displayed on a bar chart. 3 The top bar can be thought of as a target to be reached by countries. Figure 6. org/gcr HANDBOOK ON CONSTRUCTING COMPOSITE INDICATORS: METHODOLOGY AND USER GUIDE – ISBN 978-92-64-04345-9 - © OECD 2008 41 Figure 7. K Government, 2004) Figure 8. Example of line chart presentation of composite indicator Denmark Belgium Greece France 150 140 Price level 130 120 110 100 EU27 90 80 70 60 2000 2001 2002 2003 2004 2005 2006 Note: EU price level index.

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