Abstract

http://ssrn.com/abstract=2026293
 


 



A Note on the Indeterminacy and Arbitrariness of Pena’s Method of Construction of Synthetic Indicators


Sudhanshu K. Mishra


North-Eastern Hill University (NEHU)

March 19, 2012


Abstract:     
In this paper we demonstrate that Pena’s method of construction of a synthetic indicator is very sensitive to the order in which the constituent variables (whose linear aggregation yields the synthetic indicator) are arranged. Since m number of constituent variables may be arranged in m-factorial ways, even a moderately large m can give rise to a very large number of synthetic indicators from which one cannot choose the one which best represents the constituent variables. Given that an analyst has too little information as to the order in which a sizeable number of constituent variables must be arranged so as to obtain the best representative synthetic indicator, Pena’s method can give only an arbitrary synthetic indicator whose representativeness is indeterminate and uncertain.

Number of Pages in PDF File: 11

Keywords: Synthetic indicators, Human development, NP-Hard problem

JEL Classification: C43, O15, C18

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Date posted: March 22, 2012  

Suggested Citation

Mishra, Sudhanshu K., A Note on the Indeterminacy and Arbitrariness of Pena’s Method of Construction of Synthetic Indicators (March 19, 2012). Available at SSRN: http://ssrn.com/abstract=2026293 or http://dx.doi.org/10.2139/ssrn.2026293

Contact Information

Sudhanshu K. Mishra (Contact Author)
North-Eastern Hill University (NEHU) ( email )
NEHU Campus
Shillong, 793022
India
03642550102 (Phone)
HOME PAGE: http://www.nehu-economics.info
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