Assessing Multidimensional Sustainability of European Countries with a Novel, Two-Stage DEA

The issues of sustainability and sustainable development are considered important aspects of governmental policy making. Currently, many methods are used to assess the sustainability of various regions and countries each accompanied by advantages and disadvantages. The objective of the current paper is to propose a new methodological framework for the assessment of sustainability that attempts to mitigate some of the limitations of the methods that are used. The proposed method is based on two-stage Data Envelopment analysis. In the first stage, raw data are transformed to sub-indicators using the multiplicative version of the VRS DEA model. The sub-indicators are used in the second-stage, in a typical Benefit-of-the-Doubt model, to calculate their optimal weights, which are used in the construction of a geometric composite indicator of sustainability. The method is tested to calculate a sustainability index for 28 European countries. The results show that eastern European and Scandinavian countries appear to be more sustainable than western, developed countries.