Alternative approaches to constructing composite indicators: an application to construct a Sustainable Energy Index for APEC economies

Existing literature about constructing composite indicators (CIs) mainly depend on weighting sub-indicators. In this paper, we first use a state-of-the-art MCDM method with mild weights restrictions to aggregate sub-indicators, without determining exact values of weights. We take into consideration of all possible importance rankings of sub-indicators to construct CIs. Two alternative approaches, namely, minimizing the total deviation from the ideal point and minimizing the mean absolute deviation, are then proposed to develop weighting schemes with respect to all sub-indicators sequences. The proposed approaches are applied to construct a Sustainable Energy Index for eighteen APEC economies.