estions regarding their accuracy and reliability. Given the seemingly ad hoc nature of their computation, the sensitivity of the results to different methodological choices during their development, and continuing problems of missing data, composite indicators can result in distorted outcomes and incorrect policy prescriptions. In practice, it is hard to imagine that the debate on the use of composite indicators will ever be settled.
Just to make an example, official statisticians may tend to resent composite indicators, whereby a lot of work in data collection and editing is “wasted” or “hidden” behind a single number of dubious significance.
On the other hand, the temptation of stakeholders and practitioners to summarise complex and sometime elusive processes (e.g. sustainability, single market policy, etc.) into a single figure to benchmark country performance for policy consumption seems likewise irresistible.
All things considered, composite indicators should be identified for what they are -- simplistic presentations and comparisons of performance in given areas to be used as starting points for further analysis.
More info: Composite Indicators Research Group (COIN)