# How to create a composite index in stata

### How do you create a composite index score?

The general procedure for generating

**composite**/**indicator scores**includes the following steps: (1) convert, or recode, nominal or ordinal (Likert) responses to numeric responses, (2) apply a factor analysis model which reflects the known structure, or calculated correlation structure, of the variables, (3) save the### How do you create an index?

Three steps in

**index**construction can commonly be distinguished, namely: (1) Item/variable selection; (2) examining the empirical relationships of variables and combining of these items into an**index**; and (3) validating the**index**.### What is additive index?

**ADDITIVE INDICES**. An

**index**is an

**additive**combination of ordinal variables, all measured at the same level and identically coded. An example is a Likert scale, which is an

**additive index**of 5 or 7 valued ordinal measures.

### What is the index of a variable?

The

**variable**FOUND refers to the number of observations in the**index**. It is declared Read-Only of course. A second**variable**related to the**index**is the**INDEX**array, of dimension FOUND, which contains the observation numbers of all observations in the**index**.### What is the another name of index variable?

Your Answer is here:-

A **Index Variable** Methods.

### How do you explain an index?

An

**index**is an indicator or measure of something. In finance, it typically refers to a statistical measure of change in a securities market. In the case of financial markets, stock and bond market**indexes**consist of a hypothetical portfolio of securities representing a particular market or a segment of it.### What is Index example?

The definition of an

**index**is a guide, list or sign, or a number used to measure change. An**example**of an**index**is a list of employee names, addresses and phone numbers. An**example**of an**index**is a stock market**index**which is based on a standard set at a particular time.### Who is the father of index number?

It is Lowe, Joseph who should be seen, according to Kendall, M.G. (1977), as the true

**father of index numbers**. His work, published in 1822, called The present state of England, treated many problems relative to the creation of**index numbers**.### What is index number formula?

Simple Aggregative Method:

In this method, the **index number** is equal to the sum of prices for the year for which **index number** is to be found divided by the sum of actual prices for the base year.

### What is the ideal formula?

Fisher

**formula**is called**ideal formula**in a sense that the time reversal test and the factor reversal test are satisfied. This**formula**is used in the case when prices and quantities at the base and the observation period are quite different. In Japan, base period = price reference period = weight reference period.### How do you read index numbers?

An

**index**starts in a given year, the base year, at an**index number**of 100. In subsequent years, percentage increases push the**index number**above 100, and percentage decreases push the figure below 100. An**index number**of 102 means a 2% rise from the base year, and an**index number**of 98 means a 2% fall.### What is index number with example?

**Index numbers**measure the net change among the related variables over a period of time or at two or more places. For

**example**, change in prices, production, and more, over the two periods or at two places.

### What is index number in simple words?

An

**index number**is an economic data figure reflecting price or quantity compared with a standard or base value. The base usually equals 100 and the**index number**is usually expressed as 100 times the ratio to the base value.### What is index number and its types?

**Index numbers**are used as an indicator to indicate the changes in economic activity. They also provide framework for decision making and to predict future events. There are three

**types**of

**index numbers**which are generally used. They are price

**index**, quantity

**index**and value

**index**.

### What is the most commonly used index number?

Price

**Index Number**is a normalized average (**typically**a weighted average) of price relatives for a given class of goods or services in a given region, during a given interval of time. It is the**most commonly used index number**.### Which index number is called as ideal index number?

Fisher’s

**Index Number is called as ideal**because, it is free from bias in use of weights ie. it takes both current and base year quantities as weights.### What is N index number?

The

**index**of a**number**says how many times to use the**number**in a multiplication. It is written as a small**number**to the right and above the base**number**. In this example: 8^{2}= 8 × 8 = 64. The plural of**index**is**indices**. (Other names for**index**are exponent or power.)### What is weight in index number?

When all commodities are not of equal importance, we assign

**weight**to each commodity relative to its importance and the**index number**computed from these**weights**is called a weighted**index number**.### How do you weight an index?

To determine the

**weight**of each stock in a value-weighted**index**, the price of the stock is multiplied by the number of shares outstanding. For example, if Stock A has five million outstanding shares and is trading at $15, then its**weight**in the**index**is $75 million.### What are the types of weighted index numbers?

**Index**Summary

While there are other **types of weighted indexes**—revenue-**weighted indexes**, fundamentally-**weighted indexes**, factor- and even float-adjusted **indexes**—the three outlined here are the ones most typically used with ETFs.

### What is the formula for laspeyres index?

The

**Laspeyres Index**is calculated by working out the cost of a group of commodities at current prices, dividing this by the cost of the same group of commodities at base period prices, and then multiplying by 100. This means that the base period**index**number is always 100.### What is the formula for Fisher index number?

**Formula**for the

**Fisher**Price

**Index**

Pi,t is the price of the individual item at the observation period. Pi,0 is the price of the individual item at the base period. Qi,t is the quantity of the individual item at the observation period. Qi,0 is the quantity of the individual item at the base period.

### What is a laspeyres index?

The

**Laspeyres**Price**Index**is a price**index**used to measure the economy’s general price level and cost of living, and to calculate inflation. The rise in the price level signifies that the currency in a given economy loses purchasing power (i.e., less can be bought with the same amount of money)..