The Role of Extended IRT Models for Composite Indicators Construction

Composite indicators are the conventional approach to socio-economic evaluation and are obtained by the combination into a single metrics of a number of individual indicators, each assessing a dimension of the latent phenomenon at issue. When dealing with the measurement of complex latent phenomenon, an objective is to seek information on the different dimensions contributing to characterise such multidimensional phenomenon. At the same time, it is also important to highlight potential differences in the behaviours of the units at issue (i.e., citizens, students, Countries, etc.) as regards such ascertained dimensions. For this twofold purpose, we describe the potentials of an extended Item Response Theory model, which allows us to: (i) retain the multidimensional structure of the data, and (ii) classify units in homogeneous groups, with very similar behaviours in terms of each dimension of the phenomenon at issue. The potentials of such model are illustrated considering the data from the Italian Multipurpose Survey, and specifically the part of it reserved to peoples’ habits as regards to their spare time and holidays.