Sensitivity of TOPSIS ranks to data normalization and objective weights on the example of digital development

Abstract

AbstractThe European Commission's Digital Economy and Social Index (DESI) is a composite index that aims to measure the state of digital transformation in the European Union (EU) and its member states based on five principal dimensions. For each dimension, the Commission assigns predefined weights to determine the ranking of countries. The following paper ranks the member states using the Technique for Order of Preference by Similarity to Ideal Solution (TOPSIS) method. TOPSIS is based on two data transformations. First, it normalizes the data according to a chosen procedure and second, it assigns weights to the criteria. The aim of the study is to evaluate how the countries of the European Union can be ranked according to the five principal dimensions of the DESI but using objective weights instead of the arbitrary predefined weights of the European Commission, testing the robustness of the ranking and its sensitivity to the methods of normalization and weighting.