ACM Analytics, LLP: Informational Paper

Composite Ranking Using Multiple
Indicators

“We are drowning in information and starving for
knowledge.” 
Rutherford D. Rogers

The increasing availability of large integrated databases and access to the information ("big data") created a data-rich environment. New measures/indicators regularly emerge, making room for innovative solutions, such as combining these measures/indicators to represent concepts not yet quantified - composite indicators (CIs).In addition, prioritizing the available information helps businesses and governments make more targeted data-driven decisions using rule-based and statistical methods. Ranking is one way to summarize the data to attain an initial decision on where to focus resources and time -CIs are often used in such cases. It is worth emphasizing as stated by Michaela Saisana that “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 and discussion.” 

 

Some examples of ranking include:

➢ Ranking of K-12 students in a school by their height;

➢ Ranking institutions of higher education by their overall performance;

➢ Ranking countries by their Human Development Index;

➢ Ranking countries by the opacity of their financial institutions - the Financial Secrecy          Index.

©2020 by ACM Analytics, LLP. All Rights Reserved.