Open Solution Approaches: Not Just for Decision Making

Indices have policy and decision making implications as they are created to simplify the delivery of a more complex set of information. The open solution approach used in alternatives ranking and multi-criteria decision analysis also provides a solid foundation for understanding indices and their construction. Examples of commonly found indices are the Dow Jones Industrial Average (DJIA), Consumer Reports’ ratings for appliances, US News and World Reports College Ranking, the Organisation for Economic and Co-operative Development (OECD) Better Life Index, and Sustainability indices. The Federal Reserve Board and investors look to the DJIA’s value as one of many factors to assess US fiscal policy, determine whether and what stocks to invest, and judge the health of the US economy. A highly ranked appliance may compel consumers to choose that brand over others, resulting in increased profits for the appliance manufacturer. Therefore, stakeholders commonly use indices to help them to decide what to do but typically do so without understanding what factors comprise these indices. The current reality of indices is that they are often a convenient shortcut around a robust policy discussion to a policy conclusion. A more knowledgeable citizenry schooled in open solution approaches could change this reality, by better informing their own decision making and by making index creators more accountable.