Two in One: A New Tool to Combine Two Rankings Based on the Voronoi Diagram

Abstract

In this paper, we propose a novel method for ranking items such as countries, individuals, or firms based on two indices. This approach is particularly useful when constructing a composite indicator that combines both dimensions is not feasible. The proposed ranking approach involves an iterative scheme where the Voronoi algorithm is applied in a two-dimensional space at each step. To provide empirical evidence that our approach works satisfactorily, we applied the Voronoi-based iterative scheme to rank 34 European countries based on two dimensions: the Human Development Index (HDI) and the Happiness Index (HI). The correlation coefficient between the rankings based on HDI and HI is lower than the correlation coefficients between the Voronoi-based ranking and HDI, as well as between the Voronoi-based ranking and HI. These results suggest that the new method is capable of better capturing the information from both original indices.