Disentangling Heterogeneity Gaps and Pure Performance Differences in Composite Indexes Over Time: The Case of the Europe 2020 Strategy

Composite indexes have been widely used in different contexts to evaluate the performances of entities. The popularity of these indexes come mainly from their ease of use, interpretation and computation. In practice, heterogeneity could be present in the performance evaluation exercise due to differences between entities. For example, they could differ with respect to their ownership, geographical localization, economic infrastructure, resource endowments, social environment, and so on. As a result, composite indexes fail to capture the performance differences, as they are biased by the presence of heterogeneity. In this paper, we suggest a simple procedure to disentangle the heterogeneity gaps and pure performance differences in the composite indexes over time. We apply our procedure to the case of the Europe 2020 strategy by distinguishing between old and new European members.