Which of the following statements about calculating composite indices is NOT correct?
A) The weighted average of relatives and weighted aggregate produce the same value
B) Neither method for calculation is preferred - but the method used in calculation should be reported
C) When comparing composite indices, the same method should be used
D) The weighted average of relatives method is less affected by extreme values than the weighted aggregate method

Question

Quizplus · Accepted Answer

The weighted average of relatives and the weighted aggregate methods can produce different values because they approach the calculation differently. The weighted average of relatives method calculates the average of relative changes, while the weighted aggregate method sums up the total changes, each weighted by their importance or share. These different approaches can lead to different results, especially when the data set includes extreme values.

Which of the Following Statements About Calculating Composite Indices Is