Cost and performance: a composite indicator for separated waste collection in Italy

In the last years, the production of information and statistics about waste management and
separated waste collection has consistently increased. This paper builds a composite indicator
for the separated waste collection in Italy taking into consideration both the performances and
the costs via a hierarchical latent variable model.
In detail, we propose a composite indicator which complies good properties and detects the
main dimensions of the phenomenon. Each dimension is measured as a specific composite
indicator which reflects a subset of variables. This paper therefore provides a hierarchically
aggregated model-based index that best describes the separated waste collection in Italy with
its main features by identifying the most important second order (i.e., hierarchical)
relationships among the subsets of manifest variables. All the parameters are estimated
according to the maximum likelihood estimation method in order to make inference on the
parameters and on the validity of the model.