A New Composite Indicator of Household Risk Preparation

In this paper, we conceive, define and propose a new manageable composite statistical indicator conceptualising and measuring the cross-country preparedness of households - of a certain country - to face generic risk events, in particular adopted here for EU15 member states. We construct our original composite statistical variable by using the following basic empirically measurable statistical variables: Access to finance index (%), Wealth per adult ($US), Debt per adult ($US), Insurance (% of GDP), Unemployment rate (% of labor force), Mean years of schooling, GNI per capita (current $US), government gross debt (% of GDP), Physicians (n° per 10,000 persons). In order to build up our new index we use the principal component analysis of Stata and, secondly, a simple linear aggregate analysis after renormalization. We, finally, conduct the two analysis for the study case of EU15 countries, creating two ordered cardinal tables and confront the two series of results in order to verify the meaningfulness of our proposed new statistical index.