Abstract
AbstractComposite indicators (CIs) approach has been widely accepted as a useful tool for assessing system performance at macro level. Several recent studies have shown that the weighted product (WP) method, a multiple criteria decision analysis method, may be a good choice in constructing CIs. However, a problem in its application is the subjectivity in determining the weights for sub‐indicators. This paper extends the WP method and proposes an optimization‐based approach to constructing CIs. The proposed approach requires no prior knowledge of the weights for sub‐indicators. The weights used can be generated by solving a series of multiplicative DEA type models that can be transformed into equivalent linear programs. Additional information on the weights can be easily incorporated into the proposed models. A case study on assessing the performance of APEC economies towards sustainable energy development is finally presented to illustrate the use of the approach.
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