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standardized and normalized values determined for every indicator measure the difference -
positive and negative - of the indicator under consideration from the national average. In other
words, if an indicator happens to be, say, 0.947, its value is 5.3% below the national average; if
it happens to be, say, 1.121, it is 12.1% above the national average. Therefore the snapshot taken
reveals how much the indicators of commodities and of conversion factors differ from the
average value “1”.

Having gathered data for all indicators, it is possible to convert commodities into
functionings via the conversion factors, thus obtaining “converted commodities”. In fact if we
consider the national average (i.e. 1) as the reference value17, the value of the conversion factors,
representing the distance from the reference value, could be seen as the “magnitude” of the
conversion factor for the region in analysis. Therefore if the conversion factor is supposed to
facilitate the translation of a commodity into a functioning (i.e. it is favorable), the commodity
itself must be multiplied by the conversion factor; on the other hand if the conversion factor
hinders such a translation (i.e. it is non favorable), the commodity must be divided by the
conversion factors.

Assuming for explicative purposes that only one18 commodity could determine, through
conversion factors, a specific functioning, we have 4 situations:

Table 1 - The results of the conversion process

Situations

Conversion

Converted
commodity

CF favorable >1

C*CF

F>C

CF favorable <1

C*CF

F<C

CF non favorable>1

C/CF

F<C

CF non favorable<1

C/CF

F>C

where:

CF= conversion factor

C = commodity
F= functioning

An example19 may be of some help. We assume, once again for explicative purposes, that the
functioning “Physical and Psychological Health” (PPH) is defined only by a commodity
regarding health (indicator: “Health System Employee”, i.e. the overall number of medical and
paramedical employees of public and private health system in Italian regions) whose
standardized and normalized value is 1.179 (i.e. 17.9% higher than Italian national average). The
conversion factor favouring the translation of this commodity into the functioning PPH is good
health, and the relative indicator is “Health conditions”, whose value is 1.012 (i.e. 1.2% above
Italian average). The factors that hamper the conversion are the age of the population (the older,
the less healthy) whose indicator is “Elderly” with value 0.927, and smoking habits, whose
indicator is “Smokers” with value 1.172. Thus to convert the indicator of commodity “Health
System Employee”, into the functioning PPH we must respectively multiply and divide the
former by the indicator of conversion factor “Health conditions”, and by the indicators of
conversion factors “Elderly” and “Smokers”:

17 The national average has no ethical meaning, it is neither “good” nor “bad” in itself.

18 In fact in CFM each functioning is determined by more converted commodities. In this case instead the converted
commodity and the functioning coincide.

19 This example is a simplified excerpt of the functioning “Physical and Psychological Health” for Lombardy. The
value of the functioning is merely exemplificative.

12



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