Measuring Public Value Through Composite Indices: Critical Issues and Preliminary Proposals in the Integrated Planning (PIAO) of Italian Public Administrations

This work explores the usefulness of composite indices in the performance measurement of Public Administrations (PAs) following a Public Value (PV) approach. This approach operationalized through the PV “Pyramid” framework and the dimensions therein (impacts, performance, administrative resources), has been institutionalized in Italian PAs through a new performance planning document (named “PIAO”). Moreover, an open issue regards the techniques to be used in the performance measurement. Composite indices seem to be suitable for combining different raw indicators into the unobservable constructs of the PV Pyramid. Few normalization techniques, required for the aggregation, can be reasonably applied: distance from a reference, rescaling, and a mixed approach. An illustrative “toy” example is provided to show the pros and cons of each technique, revealing the applicability of the first normalization technique and the good properties of the third one, even if some limitations remain in terms of meaningfulness.