Using composite indicators in econometric decision models: With application to occupational health

Andranick S. Tanguiane

No 143, Working Paper Series in Economics from Karlsruhe Institute of Technology (KIT), Department of Economics and Management

Abstract: The paper explains the use of composite indicators as objective functions in econometric decision models. We consider an example of minimizing the harm from two kinds of pollution at the workplace, which can be reduced by two types of anti-pollution measures restricted to a given budget. At first, we define the pollution harm as a sum of two factors and find the optimal budget distribution to minimize it. Next, the harm is regarded as a probabilistic risk, and the cumulative effects from the interaction of two factors is taken into account. The corresponding indicator of the occupational hazard becomes a quadratic function, resulting in a different budget distribution. We also discuss the methodology of using composite indicators and refer to advanced methods of their construction.

Keywords: occupational health; occupational hazard; composite indicators; objective functions; multiple criteria decision making; decision support aid; budgeting (search for similar items in EconPapers)
JEL-codes: D81 J28 Q52 Q53 (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:kitwps:143

DOI: 10.5445/IR/1000124748

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