Interpretability of Composite Indicators Based on Principal Components

Table 1

Numeric example to illustrate the explainability of composite indicators.

Input variable ID	Original loadings			Loadings with constraints
	Loading score 1	Loading score 2	Correlation with CI	Loading score 1	Loading score 2	Correlation with CI
1	−0.54	0.24	−0.33	0.00	1.00	0.62
2	0.53	0.23	0.63	0.67	0.00	0.50
3	0.10	0.92	0.70	0.36	0.00	0.32
4	0.50	−0.17	0.34	0.58	0.00	0.43
Variance explained	1.19	1.01		1.09	1.00