EU Science Hub

Simplifying the complex: informing and monitoring policies with composite indicators

Feb 03 2016

How to measure the rule of law, the cost of climate change or economic growth potential? How to monitor their evolution? Composite indicators and scoreboards are often behind the numbers that are communicated to the public, as they have the power to compress many different variables into a single number. On 3 February 2016, the European Commission launched a competence centre to bring together the policy and scientific expertise available in-house to ensure their highest quality.

Composite indicators are built by simplifying a policy concept into a summary figure by means of a conceptual framework and statistical analysis. Behind them, there are teams of economists, sociologists, lawyers and many others. They are powerful practical tools that can help policy-makers summarise complex and interdependent phenomena, such as competitiveness, economic growth, freedom of press or climate hazards. Composite indicators also help provide the big picture, are easy to interpret, to communicate and attractive for the public.

Commission services, including the JRC, have developed more than 100 composite indicators, such as the Europe 2020 Index or the Digital Economy and Society Index and a similar number of scoreboards, for example the European Innovation Union Scoreboard or the Consumer Conditions Scoreboard. They are used for designing and monitoring policies. Their number is steadily increasing, as simplified  but still objective and transparent monitoring tools are needed for ever more complex policy issues.

The new competence centre will help ensure that all composite indicators are developed sensibly and used responsibly. In the course of 2016 it will offer an open access platform to composite indicators and scoreboards developed or used by the Commission. It will also publish an easy to use tool, developed by the JRC, for the assessment of some of the statistical properties and robustness of composite indicators, as well as guidelines on constructing composite indicators. The centre will be coordinated by the JRC and builds on the JRC’s expertise in this field.

Composite indicators in the JRC

The JRC started working on composite indicators in 2002 on various policy areas including multidimensional poverty, lifelong learning, innovation, governance, justice, environmental pressure, education, competitiveness, culture and creativity, civic engagement, among others. It is part of the Statistical Advisory Board for the UN Human Development Index, collaborates with UNICEF for child-poverty issues, and has assessed, upon request of the developers, over 100 composite indicators, among which are the Global Innovation Index (INSEAD & World Intellectual Property Organisation), the Multidimensional Poverty Assessment Tool (UN International Fund for Agricultural Development), the Global Competitiveness Index (World Economic Forum), the Corruption Perceptions Index (Transparency International), and the Environmental Performance Index (Yale University, Columbia University). Together with the OECD, it has published the Handbook on Constructing Composite Indicators: Methodology and User Guide, which has become the reference report for practitioners constructing composite indicators.

Composite indicators and scoreboards in the Commission

The first composite indicator from the Commission dates back to 1987. Among over 100 composite indicators currently used are the Europe 2020 Index, the Regional Human Development Index and the Regional Poverty Index (Directorate-General for Regional Development), the European Innovation Union Scoreboard and the Small Business Act Principles (Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs), the Research Excellence Index and the Innovation Output Indicator (Directorate-General for Research and Innovation), the Consumer Conditions Index and the Market Performance Index (Directorate-General for Justice and Consumers), the Digital Economy and Society Index (Directorate-General for Communications Networks, Content & Technology), the Banks' contribution to EU Single Resolution Fund (Directorate-General Financial Stability, Financial Services and Capital Markets Union), the Index for Risk Management (Directorate-General for Humanitarian Aid & Civil Protection) and the Cultural and Creative City Monitor of the JRC.