Composite Indices Construction: The Performance Interval Approach

In the last years, there has been a growing interest in composite indices, whether they be social, socio-economic or environmental indices. In this paper, we propose a new approach to the composite indices construction which consists in computing an interval of possible values, for each statistical unit, rather than a single value. The interval is called ‘performance interval’ and it is constructed depending on the level of compensability of individual indicators. As an example of application, we considered a set of indicators of well-being in Italy and we constructed the performance intervals for the Italian Regions. Finally, we compared the midpoint of the performance intervals with the geometric mean, a classic partially compensatory aggregation function.