A Comparative Study of Various Inclusive Indices and the Index Constructed by the Principal Components Analysis

Introduction: A composite index (or simply an index) is constructed with an objective to obtain a synoptic or comprehensive single number, representing a vast array of measurements on the multiple aspects of a ‘conceptual entity’ such as general price level, cost of living, level of economic development and regional disparities (Adelman and Morris, 1967; Pal, 1975; Mishra and Chopra, 1978; Mishra and Gaikwad, 1979), quality of life (Mishra and Ngullie, 2003), human development (Cahill and Sánchez, 2001; OECD, 2003; Jahan, 2005), status of social well being (Salzman, 2003), etc. Following Saltelli (2007), Michalos et al. (2006), Nardo, et al. (2005), Booysen (2002) and Michalos (1980) the list of advantages of composite indices (enlisted by Michalos et al. 2006) may me presented as follows: