9 Steps of Ordinal Ranking or QOL Index Building

1. 9 Steps of Ordinal Ranking or QOL Index Building Linked to Excel file

2. Modeling Methodologies • Ordinal Ranking -- most popular, creates a technique for normalizing and summing together a variety of variables • Factor Analysis -- also popular, a sophisticated statistical technique to cluster and order multiple variables • Other clustering or additive techniques also used

3. ORDINAL RANKING PROCEDURE • Describe Modeling Technique • Show Example • Perform a “hands-on” exercise

4. Steps After Defining the Goal of the Study: 1. Select Geographic Places/Scale to be Ranked 2. Select Variables/Measures used to study the Places 3. Assign measures of value to each Variable 4. Determine utility functions for each Variable and replace Variable measure with corresponding utility measure

5. Steps continued 5. Rank Variables, highest to lowest 6. Give relative weights to adjacent Variables 7. Calculate absolute weights for entire system 8. Create weighted utility table 9. Rank the Places

6. Purpose: Example Study GOAL • Upon Graduation, Select the best cities to start your career Measures • Best city should have: • Good Market • Good business climate • Good work force • Strong Community Spirit

7. 1.Select Geographic Places to be Ranked

8. 2.Select Variables used to study the Places Translating Ideas/Measures into Variables: Good Market • People Have Jobs = Low Unemployment • People Have Money = High Income Good Business Climate • Costs are Low = Low Housing Cost Good Work Force • People are Talented = Highly Educated Strong Community Spirit • People work together well = Many Volunteers

9. 2.Select Variables used to study the Places, continued

10. 3.Assign measures of value to each Variable and Indicate if it is a GOOD or BAD

11. 3.Assign measures of value to each Variable, continued

12. 4. Determine utility functions for each Variable and replace Variable measure with corresponding utility measure Need to Create Measurement System Common to All Variables Problem • Not all variables measured in same units • Example Unemployment is in % and Income is in $ Solution • Translate all variables into “utils” or units of utility

13. Utility Conversion Equations For a GOOD Uvi = (Xvi - MINv)/ (MAXv - MINv) Notation: Xvi= Variable v measured in units for place i MAXv = Maximum value of variablev MINv = Minimum value of variablev Uvi = Variablevmeasured in "utils" for placei v = subscript representing all variables i = subscript representing all places

14. Utility Conversion Equations, continued For a BAD Uvi = (MAXv - Xvi)/ (MAXv - MINv)

15. Utility Conversions

18. 5. Rank Variables most important to least • Most important Variable Ranked first, next most important ranked second, next third, until all included

19. 6. Give relative weights to adjacent Variables • Indicate how much more important two adjacently ranked variables are, always >1 • Lowest variable assigned weight of one

20. 7. Calculate absolute weights for entire system • Absolute Weights indicate the over-all impact of a variable to the model • Note that the highest ranking variable has the greatest weight

21. 7. cont. • Actual Calculations

22. 8. Create weighted utility table and sum results • Multiply Utility Measures by Absolute Weights, result is Weighted Utility • Sum Weighted Utility to Determine QOL for a place

24. 9. Rank the Places

25. 10. Critique results What about weather in St. Paul

26. CONCLUDING REMARKS

27. CONCLUDING REMARKS • Means for greater understanding • Need to also Map your results • Consider where to go from here