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. Translating Ideas/Measures into Variables:
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. Need to Create Measurement System Common to All Variables
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 variable v
MINv = Minimum value of variable v
Uvi = Variable v measured in "utils" for place i
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