Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/225284 
Year of Publication: 
2020
Series/Report no.: 
KIT Working Paper Series in Economics No. 143
Publisher: 
Karlsruher Institut für Technologie (KIT), Institut für Volkswirtschaftslehre (ECON), Karlsruhe
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.
Subjects: 
occupational health
occupational hazard
composite indicators
objective functions
multiple criteria decision making
decision support aid
budgeting
JEL: 
D81
J28
Q52
Q53
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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