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Copula-based measurement of dependence between dimensions of well-being

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  • Koen DECANCQ

Abstract

Well-being consists of many dimensions such as income, health and education. A society exhibits greater dependence between its dimensions of well-being when the positions of the individuals in the different dimensions are more aligned or correlated. Differences in dependence may lead to very different societies, even when the dimension-wise distributions are identical. I propose to use a copula-based framework to order societies with respect to their dependence. A class of measures of dependence is derived to which the multidimensional rank correlation coefficient belongs. I illustrate the usefulness of the approach by showing that Russian dependence between three dimensions of well-being has increased significantly between 1995 and 2003. Unfortunately, the aspect of dependence is missed by all composite well-being measures based on dimension-specific summary statistics such as the popular Human Development Index (HDI).

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Paper provided by Katholieke Universiteit Leuven, Centrum voor Economische Studiën in its series Center for Economic Studies - Discussion papers with number ces09.24.

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Date of creation: Dec 2009
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Handle: RePEc:ete:ceswps:ces09.24

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Keywords: copula; complex inequality; concordance; HDI; multidimensional inequality; Russia; well-being.;

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  1. Larry G. Epstein & Stephen M. Tanny, 1980. "Increasing Generalized Correlation: A Definition and Some Economic Consequences," Canadian Journal of Economics, Canadian Economics Association, vol. 13(1), pages 16-34, February.
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  3. Koen DECANCQ, 2010. "Copula-based orderings of multivariate dependence," Center for Economic Studies - Discussion papers ces10.08, Katholieke Universiteit Leuven, Centrum voor Economische Studiën.
  4. M. Taylor, 2007. "Multivariate measures of concordance," Annals of the Institute of Statistical Mathematics, Springer, vol. 59(4), pages 789-806, December.
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  8. Schmid, Friedrich & Schmidt, Rafael, 2007. "Multivariate conditional versions of Spearman's rho and related measures of tail dependence," Journal of Multivariate Analysis, Elsevier, vol. 98(6), pages 1123-1140, July.
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Cited by:
  1. Koen Decancq & María Ana Lugo, 2009. "Measuring inequality of well-being with a correlation-sensitive multidimensional Gini index," Working Papers 124, ECINEQ, Society for the Study of Economic Inequality.
  2. Suman Seth, 2013. "A class of distribution and association sensitive multidimensional welfare indices," Journal of Economic Inequality, Springer, vol. 11(2), pages 133-162, June.

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