One Market, One Number? A Composite Indicator Assessment of EU Internal Market Dynamics

38 Pages Posted: 27 Sep 2005

See all articles by L. Cherchye

L. Cherchye

KU Leuven; Erasmus Research Institute of Management (ERIM)

C.A. Knox Lovell

University of Georgia - C. Herman and Mary Virginia Terry College of Business - Department of Economics

Wim Moesen

KU Leuven - Faculty of Business and Economics (FEB)

Tom Van Puyenbroeck

European Academy of Brussels

Date Written: June 2005

Abstract

We consider the lack of consensus about an appropriate theoretical framework linking sub-indicators as a defining characteristic of composite indicators. This intrinsic feature implies uncertainties about the appropriate normalisation and aggregation of the raw data. The two are related: index theory offers some valuable guidelines about their connection. Yet these do not fully solve the basic problem of expert disagreement. We embed such (residual) disagreement in the aggregation method itself. Specifically, we apply an impartial benefit-of-the-doubt weighting procedure, where weight restrictions incorporate the available information on experts' opinions. We apply this procedure to the dynamic performance assessment of EU Internal Market effects, thereby highlighting its capacity to disaggregate member states' observed performance shifts into changes relative to benchmarks and performance changes of the benchmarks (i.e. catching up versus genuine progress). Our results indicate that the latter factor is more important in explaining the observed progress.

Keywords: Composite Indicators, Aggregation, Weighting, Internal Market

JEL Classification: E13, E60, F02, O47

Suggested Citation

Cherchye, Laurens and Lovell, C.A. Knox and Moesen, Wim and Van Puyenbroeck, Tom, One Market, One Number? A Composite Indicator Assessment of EU Internal Market Dynamics (June 2005). Available at SSRN: https://ssrn.com/abstract=808905 or http://dx.doi.org/10.2139/ssrn.808905

Laurens Cherchye

KU Leuven ( email )

Oude Markt 13
Leuven, Vlaams-Brabant
Belgium

Erasmus Research Institute of Management (ERIM)

P.O. Box 1738
3000 DR Rotterdam
Netherlands

C.A. Knox Lovell

University of Georgia - C. Herman and Mary Virginia Terry College of Business - Department of Economics ( email )

Athens, GA 30602
United States
706-542-3689 (Phone)

Wim Moesen

KU Leuven - Faculty of Business and Economics (FEB) ( email )

Naamsestraat 69
Leuven, B-3000
Belgium

Tom Van Puyenbroeck (Contact Author)

European Academy of Brussels ( email )

1000 Brussels
Belgium

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