Transparency of Composite Indicators of Development

Development is a multidimensional concept that has been tried to be captured through various types of measures, one of them being composite indicators. These indicators are praised for their ability to comprise complex concepts into a single number; however, they face significant criticism since they are created through a series of subjective decisions, leaving significant scope for arbitrariness. To present a credible measure, authors should procure a transparent disclosure of the construction process and its results, thus contributing to avoid misinterpretation and misuse of the proposed measure. Therefore, the present study explores the transparency with which the construction process of three composite indicators of development is disclosed, with the purpose of highlighting aspects that require improvement. The studied composite indicators are the Social Progress Index, the Human Development Index, and the Legatum Prosperity Index. For the most recent version of the methodology of each index, the analysis finds that authors disclose their methodological decisions, though justifications, discussions of alternatives, and the implications of such decisions are often omitted. Therefore, the study advocates for improving the transparency in communicating the methodology and properties of each index, and to explain them in adherence to the adopted theoretical framework.