The Relevance of Composite Indicators in the European Statistical System

Dr. Klaus Reeh and Nikolaus Wurm

Klaus Reeh, born in 1945, studied business management and economics at the University of Hamburg and at the Saarland University, works since 1997 for the European Commission and since 2003 as adviser to the Director General of Eurostat.

Nikolaus Wurm, born in 1948, studied mathematics and IT in Munich; since 1983 working at Eurostat in various domains like informatics, foreign trade statistics, services statistics, cooperation with East European countries; there head of unit 2001-2005; since 2005 head of unit key indicators for European policies.

Our presentation consists of two parts. The first one deals with the process of defining, compiling and adopting composite indicators in the context of the European Statistical System. Here we look at the preconditions that have to be met for a composite indicator to be recognised within the framework of official statistics. These criteria comprise the dimensions of quality (relevance, accuracy, timeliness, accessibility, comparability, coherence) usually applied to statistical data, but adapted to the specific situation of composite indicators. The different levels of involvement of the ESS are described based on quality aspects and other input. This leads us to the specific statistical objectives pursued when compiling such indicators upon request by political actors, mostly Commission DGs. Thereafter we describe the process usually followed in the European context for taking decisions about the methods and definitions to be used as well as about the organisation of the regular production and dissemination of such indicators. Finally, we discuss the evaluation process and look at the risks related to the whole process. We do this with the help of some examples and sketch the range of possible action by the ESS.

The second part deals with the role of composite indicators in the political context of the European Union. Here we look at the various usages (dealing with issues related to eligibility, compliance, convergence, sustainability, performance, benchmarking, etc.) of composite indicators. Thereafter we try to identify the risks for both official statisticians as producers and political decision makers as users related to composite indicators. Finally, we float some ideas about possible precautionary measures for reducing these risks.

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