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On Weighting the Components of the Human Development Index: A Statistical Justification

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  • Georges Nguefack-Tsague
  • Stephan Klasen
  • Walter Zucchini

Abstract

The Human Development Index (HDI) published in the Human Development Report of the United Nations Development Program has been calculated as a simple average of the Life Expectancy Index, the Education Index and the Gross Domestic Product Index. This paper provides statistical support for the use of this seemingly arbitrary equal weighting of the three components by treating human development as a latent concept imperfectly captured by its three component indices. We show that a principal component analysis (PCA) based on the correlation matrix of the components leads to practically the same weights. Specifically we show that, for the period 1975-2005, the first principal component accounts for between 78% and 90% of the total variability in the data, and that its coefficients are positive and nearly equal. By normalizing the coefficients, the simple average weighting (1/3, 1/3, 1/3) scheme is obtained. The ranks of countries obtained using the PCA weightings are very similar to those based on the HDI. An advantage of the simple equal weighting is that one can define a simple index to measure the balance of a country's development, given its HDI.

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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Journal of Human Development and Capabilities.

Volume (Year): 12 (2011)
Issue (Month): 2 ()
Pages: 183-202

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Handle: RePEc:taf:jhudca:v:12:y:2011:i:2:p:183-202

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Related research

Keywords: Human Development Index; Human Development Report; United Nations Development Program; Principal component analysis; Correlation matrix;

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Cited by:
  1. Chris Tofallis, 2013. "An automatic-democratic approach to weight setting for the new human development index," Journal of Population Economics, Springer, vol. 26(4), pages 1325-1345, October.
  2. K. Decancq & L. Van Ootegem & E. Verhofstadt, 2011. "What If We Voted On The Weights Of A Multidimensional Well-Being Index? An Illustration With Flemish Data," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 11/762, Ghent University, Faculty of Economics and Business Administration.
  3. Sevinc Rende & Murat Donduran, 2013. "Neighborhoods in Development: Human Development Index and Self-organizing Maps," Social Indicators Research, Springer, vol. 110(2), pages 721-734, January.
  4. Kenneth Harttgen & Stephan Klasen, 2010. "A Household-Based Human Development Index," Human Development Research Papers (2009 to present) HDRP-2010-22, Human Development Report Office (HDRO), United Nations Development Programme (UNDP).
  5. Jeni Klugman & Francisco Rodríguez & Hyung-Jin Choi, 2011. "The HDI 2010: new controversies, old critiques," Journal of Economic Inequality, Springer, vol. 9(2), pages 249-288, June.
  6. Philipp Kolo, 2012. "Measuring a New Aspect of Ethnicity - The Appropriate Diversity Index," Ibero America Institute for Econ. Research (IAI) Discussion Papers 221, Ibero-America Institute for Economic Research.
  7. Stephen Morse, 2013. "Bottom Rail on Top: The Shifting Sands of Sustainable Development Indicators as Tools to Assess Progress," Sustainability, MDPI, Open Access Journal, vol. 5(6), pages 2421-2441, May.

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