A maximum entropy perspective of Pena’s synthetic indicators

This paper uses mixed combinatorial-cum-real particle swarm method to obtain a heuristically optimal order in which the constituent variables can be arranged so as to yield some generalized maximum entropy synthetic indicators that represent the constituent variables in the best information-theoretic sense. It may help resolve the arbitrariness and indeterminacy of Pena’s method of construction of a synthetic indicator which at present is very sensitive to the order in which the constituent variables (whose linear aggregation yields the synthetic indicator) are arranged. JEL Code: C18, C43, C44, C61