• This study utilizes cumulative prospect theory to evaluate city infrastructure development. • It views the difference between current and previous indicator performance as gains or losses. • A case study of 33 highly urbanized Philippine cities demonstrates the proposed approach. • Findings revealed that the proposed approach penalizes those with a plateaued or declining growth. • It captures temporal and perceptual development shifts, which better represent change dynamics. There is a broad consensus in the economic literature on the positive impact of infrastructure development on socio-economic indicators. Amplified by the estimated two-thirds of the population concentrating in cities by 2050, investments in infrastructure are required to support urban activities and connectivity. Accordingly, measuring the level of development in infrastructure, particularly in cities, becomes a pivotal agenda. However, the current literature highlights the use of the weighted sum method to aggregate relevant indicators into a composite index. While straightforward, the notion of linear utility fails to account for the psychological effects resulting from gains or losses in indicator performance inherent in human perception, which are exacerbated when used in time-series analysis. Thus, this work introduces a behavioral dynamic evaluation framework inspired by the cumulative prospect theory by (1) framing gains or losses of indicator performance, (2) introducing value and weighting functions for gains and losses, and (3) aggregating psychological utility across indicators to derive the rankings of cities. An actual case of evaluating the infrastructure development of 33 highly urbanized cities in the Philippines for 2015-2023, obtained from the Cities and Municipalities Competitiveness Index database, was implemented to demonstrate the proposed framework. Findings revealed the distinctiveness of rankings generated by the proposed framework, penalizing those cities that have plateaued or are experiencing declining growth. Also, it exhibits greater sensitivity, which could reflect external shocks. The proposed approach contributes to the literature supporting policy evaluation, equitable and behavioral planning, and investment targeting by capturing temporal and perceptual development shifts.
Ocampo et al. (Sun,) studied this question.