Presentation on theme: "1 Michel Tenenhaus & Carlo Lauro A SEM approach for composite indicators building Michel Tenenhaus & Carlo Lauro."— Presentation transcript:
1 Michel Tenenhaus & Carlo Lauro A SEM approach for composite indicators building Michel Tenenhaus & Carlo Lauro
2 Economic inequality and political instability Data from Russett (1964), in GIFI Economic inequality Agricultural inequality GINI : Inequality of land distributions FARM : % farmers that own half of the land (> 50) RENT : % farmers that rent all their land Industrial development GNPR : Gross national product per capita ($ 1955) LABO : % of labor force employed in agriculture Political instability INST : Instability of executive (45-61) ECKS : Nb of violent internal war incidents (46-61) DEATH : Nb of people killed as a result of civic group violence (50-62) D-STAB : Stable democracy D-UNST : Unstable democracy DICT : Dictatorship
3 Economic inequality and political instability (Data from Russett, 1964) 47 countries
4 GINI FARM RENT GNPR LABO Agricultural inequality (X 1 ) Industrial development (X 2 ) ECKS DEATH INST Political instability (X 3 ) 1 2 3 + + + + - + + + + - Economic inequality and political instability
5 Building composite indicators 1.Separately for each block (without taking into account the other blocks). 2.For each block, taking into account all the other blocks (multi-block data analysis). 3.For each block, taking into account the causal model (Structural Equation Modelling).
6 1. Using SEM for factor analysis Measurement model 1 2 3 1 2 3
7 ULS algorithm S = Observed covariance matrix for MV Goodness-of-fit Index (Jöreskog & Sorbum): = PCA when
8 First result This solution is not admissible because
9 A solution The variance of residual e2 is fixed to a small value
10 Result 2 The variance of residual e2 is fixed to a small value:
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