Setting Weights in Multidimensional Indices of Well-being and Deprivation

Produced by: 
University of Oxford
Available from: 
March 2009
Paper author(s): 
Koen Decancq
María Ana Lugo
Topic: 
Fiscal Policy - Public and Welfare Economics
Year: 
2016

Multidimensional indices of well-being and deprivation have become increasingly popular, both in the theoretical and in the policy-oriented literature. By now, there is a wide range of methods to construct multidimensional well-being indices, differing in the way they transform, aggregate and weight the relevant dimensions. We present a unifying framework that allows us to compare the different approaches and to analyze the specific role of the dimension weights in each of them. Through interaction with choices about the transformation and aggregation of the different attributes, the weights play a crucial role in determining the trade-offs between the dimensions. Setting weights thus reflects important value judgements about the exact notion of well-being. We survey six methods to set weights usually employed in the literature. Three principles guides our assessments: first, weights should be made explicit and clear so that they can be subject to public scrutiny; second, weights should be set taking into consideration their role determining the trade-offs between dimensions; finally, weights should respect people’s preferences about these dimensions.

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