How to Construct a Subjective Index

Abstract

Wepresent a method of constructing quantitative indices, which is based on the subjective opinions of a panel of experts, and discuss how a Bayesian probability model and panel opinions can be used together to produce an index. Among the advantages of the method are its face validity and ease of construction. Research shows that when expert opinions are solicited according to certain guidelines, subjective methods may be as accurate as the more objective ones. Guidelines along with a brief report of a recent application are also discussed.