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rank various indicators based on perceived importance, and assign a monetary value to the issues they Module
think are important, or choose indicators using a process of comparison (decision support). As this is
very subjective, the weighting could be subject to scrutiny or perceived relevance over time as societal 4

values change.

If weighting is determined using more objective measures, one approach to consider is to base weighting
on quality and amount of data. A downside of this approach is that indicators containing lower quality
or a smaller amount of data are penalized, even if the indicator reflects an important and relevant Abu Dhabi, UAE

issue. Indicators may also be weighted equally, as this avoids some of the challenges presented in this
discussion. This approach could be supported by consultations and statistical tools that show minimal
differences among the indicators selected.

To more fully comprehend the message relayed by an index, it is useful to disaggregate the index into
component indicators and categories. This gives you a more detailed analysis into specific patterns or to
answer questions of decision-makers working in a more detailed context (Nardo 2005).

EXAMPLE: Well-known indices

Gross Domestic Product

Gross Domestic Product (GDP) is a well-known index measuring the size of a country’s economy. A
common approach to measuring GDP is to add together consumer expenditures, business investments
in capital, government expenditures on goods and services and net exports (GDP = C+I+G+NX).
While GDP is frequently used as a proxy for standard of living, it is not a true measure of standard of
living because only economic activity is shown. A country may have high exports, for example, but a low

standard of living because of other factors. Also, a major nuclear accident, natural disaster or marine oil
spill will raise the GDP. There are also difficulties when comparing GDP among countries, as different
calculations may be used.

Human Development Index

The key dimensions of the UN Human Development Index (HDI) are longevity, knowledge and
standard of living. For longevity, life expectancy is used to generate a sub-index. Adult literacy and

combined primary, secondary and tertiary enrolment ratio are used to generate educational attainment
or knowledge sub-index. Adjusted income is used to create the standard of living sub-index. These
three sub-indices are arithmetically combined to produce the HDI. More than 170 countries are ranked
by this index. HDI also has helped UNDP to generate a family of related indices, such as the Human
Poverty Index (HPI), Gender Related Development Index (GDI), and Gender Empowerment Measure
(GEM).

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