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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. M. Taylor, 2007. "Multivariate measures of concordance," Annals of the Institute of Statistical Mathematics, Springer, vol. 59(4), pages 789-806, December.
  2. Joe, Harry, 1990. "Multivariate concordance," Journal of Multivariate Analysis, Elsevier, vol. 35(1), pages 12-30, October.
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  6. DECANCQ, Koen, 2010. "Copula-based orderings of multivariate dependence," CORE Discussion Papers 2010012, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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Cited by:
  1. Maria Ana Lugo & Koen Decancq, 2009. "Measuring Inequality of Well-Being with a Correlation-Sensitive Multidimensional Gini Index," Economics Series Working Papers 459, University of Oxford, Department of Economics.

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