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An Alternative Approach to Measure HDI

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  • Hippu Salk Kristle Nathan

    (Indira Gandhi Institute of Development Research)

  • Srijit Mishra
  • B. Sudhakara Reddy

Abstract

The popularly known Human Development Index (HDI) is obtained through linear averaging (LA) of indices in three dimensions - health, education and standard of living. LA method assumes perfect substitutability among the indices. We question its appropriateness and propose an alternative measure, which is the inverse of the Euclidian distance from the ideal. Following Zeleny (1974), we refer to this, as the Displaced Ideal (DI) method. Through an axiomatic characterization, the paper shows that the advantages in the DI method are the following. Uniform, as against skewed, development is rewarded. Through an ideal path, it signals a future course of action. These signify that a given increment in any one dimension, with other dimensions remaining constant, has a greater significance for the index at a lower level than at a higher level. In other words, stagnancy in the dimension that has a lower value is more serious than stagnancy in other dimensions. Finally, an empirical illustration has been done by taking the statistics in Human Development Report 2006. We strongly propose that the DI method be considered over the LA method in the construction of HDI.

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Bibliographic Info

Paper provided by East Asian Bureau of Economic Research in its series Microeconomics Working Papers with number 22403.

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Date of creation: Jan 2008
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Handle: RePEc:eab:microe:22403

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Related research

Keywords: Displaced ideal; Euclidian distance; Ideal point; Linear averaging; Uniform development;

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Cited by:
  1. Jeni Klugman & Francisco Rodríguez & Hyung-Jin Choi, 2011. "The HDI 2010: new controversies, old critiques," Journal of Economic Inequality, Springer, Springer, vol. 9(2), pages 249-288, June.
  2. Nayak, Purusottam & Mishra, SK, 2012. "Efficiency of Pena’s P2 Distance in Construction of Human Development Indices," MPRA Paper, University Library of Munich, Germany 39022, University Library of Munich, Germany.
  3. Srijit Mishra & Hippu Salk Kristle Nathan, 2008. "On A Class of Human Development Index Measures," Development Economics Working Papers, East Asian Bureau of Economic Research 22340, East Asian Bureau of Economic Research.
  4. Hippu Salk Kristle Nathan & Srijit Mishra, 2010. "Progress in human development: Are we on the right path?," International Journal of Economic Policy in Emerging Economies, Inderscience Enterprises Ltd, Inderscience Enterprises Ltd, vol. 3(3), pages 199-221.
  5. Srijit Mishra & Hippu Slak Kristle Nathan, 2013. "Measuring human development index: The old, the new and the elegant," Indira Gandhi Institute of Development Research, Mumbai Working Papers, Indira Gandhi Institute of Development Research, Mumbai, India 2013-020, Indira Gandhi Institute of Development Research, Mumbai, India.
  6. Nayak, Purusottam, 2013. "Methodological Developments in Human Development Literature," MPRA Paper, University Library of Munich, Germany 50608, University Library of Munich, Germany.

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