An ultrametric model to build a Composite Indicators system

In the last years, the use of composite indicators has consistently increased, and the necessity to build model-based composite indicators with a strong methodological statistical approach becomes more and more important for reasons of trustworthiness. In this paper, we propose to build a composite indicators system able to measure different levels of relations among (group of) variables according to an ultrametric form which detects a hierarchical structure upon (group of) variables. Each dimension is measured as a specific composite indicator which reflects a subset of variables. In order to show its potential and applicability, the methodology is employed to analyze a dataset which contains variables about separated waste collection in Italy taking into consideration both its performance and its costs.