, Volume 59, Issue 2, pp 115-151

An Overview and Evaluation of Composite Indices of Development

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Abstract

The search for alternative indicators of development has witnessedthe development of a variety of composite indices of development. Theseindices integrate various social, political and economic aspects ofdevelopment in measurement. This paper presents an overview andevaluation of composite indices of development in terms of certain broaddimensions of measurement. In terms of method and technique, compositeindices are generally additive ones with equally weighted componentsconsisting of variables selected in an ad hoc manner. Numerouscriticisms have been leveled at these methods employed in compositeindexing. Composite indices are mainly quantitative insofar as theindices are all presented in numerical format. Composite indices aresubject to subjectivity despite the relative objectivity of the methodsemployed in composite indexing. Composite indices are of a cardinalnature, but remain ordinal insofar as differences in index values cannotbe interpreted meaningfully. The multidimensionality of compositeindices represents one of their main advantages. Indices representaggregate measures of a combination of complex development phenomena.The comparative application of composite indices of development overspace and time remains problematic. Composite indices generally combinemeasures of ends and means. In respect of method and technique,composite indexing is relatively complex. Composite indices arerelatively flexible, because changes in selection, scaling, weightingand aggregation can be effected readily, albeit at the cost ofcomparability. Composite indices perform relatively well in terms ofcross-national availability, but few indices perform well in terms ofinter-temporal availability. On the strength of the systematic positiveassociation between income and popular composite indices such as theHDI, many have claimed that these indices represent no real contributionto the literature on indicators research. Composite indices,furthermore, are often considered to be ideological statements ratherthan practically functional indicators. Yet, composite indices representuseful supplements to income-based development indicators. These indicesremain invaluable in terms of their ability to simplify complexmeasurement constructs, to focus attention and to catch the eye, thusenhancing their political appeal.