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Module 4.2 Indices
4 An index consists of multiple indicators combined into a composite or aggregated unit. In the course of

your IEA you have the option of using some accepted aggregate indices, develop new ones or choose
to focus only on discrete indicators. While the development of indices is a complex task, indices have

the potential to attract decision maker and media attention. In choosing your strategy you need to
9-12 December, 2013 aggregates.
consider not only the needs of your target audience, but also you capacity to effectively work with

Indices make it easier for you to interpret complex information on a wide range of topics. Indices are
often used to assess and compare performance against benchmarks or among performers, as this is

easier than comparing several discrete trends. They are best used as a starting point for discussion and
attracting public interest on an issue. You may also use them as a tool to inform policy, in which case it
is paramount that the index is both well constructed and accurately interpreted (Nardo 2005).

There are several potential drawbacks of indices. If poorly developed and communicated, indices can relay

misleading information or be misinterpreted, leading to inappropriate policy decisions. Also, because the
scope of an index is broad, it may miss specific issues that would otherwise be revealed using discrete
indicators. Finally, because an index is ideally based on the best available data and indicators, issues that
do not have associated data may not be included in the policy making process.

The selection of indicators for use in the index involves the use of a series of criteria to ensure that
appropriate indicators are selected. Select indicators that fit within the overall framework of the index,
lend themselves to aggregation, are based on high quality data, and preferably do not highly correlate to
each other, as this would amplify the effect of certain indicators within the overall index.

The construction of indices is similar to creating a mathematical model. Indicator data are standardized

using statistical tools, such as converting values to a scale of 0–100, so that all indicators can be added
together. Indicators are then weighted and combined into a single index. Because the development of
an index involves several steps that can result in variations in the final outcome, credibility is greater
when the methodology used is transparent and well documented.

A key step in the process of combining indicators into an index involves assigning relative weights to
individual indicators. Indicators with a higher weighting more strongly influence the outcome of the
index than those with a lower weighting. The decision about how to assign weights can be based on
various factors including societal values and indicator relevance to policy, as well as more objective
factors, such as the robustness of the data. If weighting is being determined by societal values and policy
relevance, you will need to consult with experts, representatives of the public and politicians to better
understand diverse perspectives on the issues. You can ask participants in your assessment process to

64 Monitoring, Data and Indicators