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On weighting the components of the Human Development Index: A statistical justification

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  • Georges Nguefack-Tsague

    (University of Yaoundé I, Cameroon)

  • Stephan Klasen

    (Georg-August-University Göttingen)

  • Walter Zucchini

    (Georg-August-University Göttingen)

Abstract

The Human Development Index (HDI) published in the Human Development Report (HDR) of the United Nations Development Program is calculated as a simple average of the Life Expectancy Index (LEI), the Education Index (EI) and the Gross Domestic Product Index (GDPI). 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 to 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 which we show below.

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Bibliographic Info

Paper provided by Courant Research Centre PEG in its series Courant Research Centre: Poverty, Equity and Growth - Discussion Papers with number 37.

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Date of creation: 15 Jul 2010
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Handle: RePEc:got:gotcrc:037

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Keywords: Human Development Index; Human Development Report; United Nations Development Program; principal component analysis; correlation matrix;

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Cited by:
  1. Koen Decancq & Luc Van Ootegem & Elsy Verhofstadt, 2011. "What if we voted on the weights of a multidimensional well-being index? An illustration with Flemish data," Working Papers 1110, Herman Deleeck Centre for Social Policy, University of Antwerp.
  2. 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).
  3. Jeni Klugman & Francisco Rodríguez & Hyung-Jin Choi, 2011. "The HDI 2010: New Controversies, Old Critiques," Human Development Research Papers (2009 to present) HDRP-2011-01, Human Development Report Office (HDRO), United Nations Development Programme (UNDP).
  4. 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.
  5. 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.
  6. 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.
  7. 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.

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