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A Household-Based Distribution-Sensitive Human Development Index: An Empirical Application to Mexico, Nicaragua and Peru

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  • Luis Lopez-Calva

    ()

  • Eduardo Ortiz-Juarez

    ()

Abstract

In measuring human development, one of the main concerns relates to the inclusion of a measure that penalizes inequalities in the distribution of achievements across the population. Using indicators from nationally representative household surveys and census data, this paper proposes a straightforward methodology to estimate a household-based distribution-sensitive human development index aggregated through generalized means. The evidence shows that the losses in human development due to inequality reach up 22, 29 and 57% in Mexico, Peru and Nicaragua, respectively. Among dimensions, the loss in the income index reaches up 61% in Nicaragua, while the education index appears as the most sensitive in the case of Mexico and Peru, with a percentage of loss between 38 and 48%. The importance of household-level calculations is highlighted when we compare the indices computed from the entire distribution with those existing indices computed for quintiles of the distribution, which minimizes the losses due to inequality. Overall, the estimations evidence a higher sensitivity of the index to inequality, and therefore an important space for public action to reduce inequality that could involve positive development returns. Copyright Springer Science+Business Media B.V. 2012

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File URL: http://hdl.handle.net/10.1007/s11205-011-9908-4
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Bibliographic Info

Article provided by Springer in its journal Social Indicators Research.

Volume (Year): 109 (2012)
Issue (Month): 3 (December)
Pages: 395-411

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Handle: RePEc:spr:soinre:v:109:y:2012:i:3:p:395-411

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Web page: http://www.springer.com/economics/journal/11135

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Related research

Keywords: Human development index; Distribution-sensitive inequality; Generalized means; Cross-sectional data;

References

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  1. Atkinson, Anthony B., 1970. "On the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 2(3), pages 244-263, September.
  2. Grimm, Michael & Harttgen, Kenneth & Klasen, Stephan & Misselhorn, Mark, 2008. "A Human Development Index by Income Groups," World Development, Elsevier, vol. 36(12), pages 2527-2546, December.
  3. Suman Seth, 2009. "Inequality, Interactions, and Human Development," Journal of Human Development and Capabilities, Taylor & Francis Journals, vol. 10(3), pages 375-396.
  4. Kolm, Serge-Christophe, 1977. "Multidimensional Egalitarianisms," The Quarterly Journal of Economics, MIT Press, vol. 91(1), pages 1-13, February.
  5. Bourguignon, F. & Chakravarty, S.R., 1998. "The Measurement of Multidimensional Poverty," DELTA Working Papers 98-12, DELTA (Ecole normale supérieure).
  6. James Foster & Luis Lopez-Calva & Miguel Szekely, 2005. "Measuring the Distribution of Human Development: methodology and an application to Mexico," Journal of Human Development and Capabilities, Taylor & Francis Journals, vol. 6(1), pages 5-25.
  7. Laurens Cherchye & Erwin Ooghe & Tom Puyenbroeck, 2008. "Robust human development rankings," Journal of Economic Inequality, Springer, vol. 6(4), pages 287-321, December.
  8. Foster, James & Greer, Joel & Thorbecke, Erik, 1984. "A Class of Decomposable Poverty Measures," Econometrica, Econometric Society, vol. 52(3), pages 761-66, May.
  9. Sen, Amartya K, 1976. "Poverty: An Ordinal Approach to Measurement," Econometrica, Econometric Society, vol. 44(2), pages 219-31, March.
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