Consequences of Data Error in Aggregate Indicators: Evidence from the Human Development Index
AbstractThis paper examines the consequences of data error in data series used to construct aggregate indicators. Using the most popular indicator of country level economic development, the Human Development Index (HDI), we identify three separate sources of data error. We propose a simple statistical framework to investigate how data error may bias rank assignments and identify two striking consequences for the HDI. First, using the cutoff values used by the United Nations to assign a country as ‘low’, ‘medium’, or ‘high’ developed, we find that currently up to 45% of developing countries are misclassified. Moreover, by replicating prior development/macroeconomic studies, we find that key estimated parameters such as Gini coefficients and speed of convergence measures vary by up to 100% due to data error.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3346.
Length: 36 pages
Date of creation: Feb 2008
Date of revision:
Publication status: published as 'Classification, Detection and Consequences of Data Error: Evidence from the Human Development Index' in: Economic Journal, 2011, 121 (553), 843 - 870
Contact details of provider:
Postal: IZA, P.O. Box 7240, D-53072 Bonn, Germany
Phone: +49 228 3894 223
Fax: +49 228 3894 180
Web page: http://www.iza.org
Postal: IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany
Other versions of this item:
- Wolff, Hendrik & Chong, Howard & Auffhammer, Maximilian, 2008. "Consequences of data error in aggregate indicators : evidence from the humand development index," CUDARE Working Paper Series 1051, University of California at Berkeley, Department of Agricultural and Resource Economics and Policy.
- Wolff, Hendrik & Chong, Howard & Auffhammer, Maximilian, 2008. "Consequences of Data Error in Aggregate Indicators: Evidence from the Human Development Index," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt18s0z7mj, Department of Agricultural & Resource Economics, UC Berkeley.
- O10 - Economic Development, Technological Change, and Growth - - Economic Development - - - General
- C82 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Macroeconomic Data; Data Access
This paper has been announced in the following NEP Reports:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Danny Quah, 1996. "Twin peaks : growth and convergence in models of distribution dynamics," LSE Research Online Documents on Economics 2278, London School of Economics and Political Science, LSE Library.
- Alberto Alesina & Beatrice Weder, 1999.
"Do Corrupt Governments Receive Less Foreign Aid?,"
NBER Working Papers
7108, National Bureau of Economic Research, Inc.
- Sudhir Anand and Amartya Sen, 2000. "The Income Component of Human Development Index," Human Development Occasional Papers (1992-2007) HDOCPA-2000-01, Human Development Report Office (HDRO), United Nations Development Programme (UNDP).
- Subhayu Bandyopadhyay, 2006.
"The Determinants of Aid in the Post-Cold War Era,"
06-14 Classification- JEL, Department of Economics, West Virginia University.
- Noorbakhsh, Farhad, 2006. "International Convergence or Higher Inequality in Human Development? Evidence for 1975 to 2002," Working Paper Series RP2006/15, World Institute for Development Economic Research (UNU-WIDER).
- Alesina, Alberto & Dollar, David, 2000.
" Who Gives Foreign Aid to Whom and Why?,"
Journal of Economic Growth,
Springer, vol. 5(1), pages 33-63, March.
- Alberto Alesina & David Dollar, 1998. "Who Gives Foreign Aid to Whom and Why?," NBER Working Papers 6612, National Bureau of Economic Research, Inc.
- Dollar, David & Alesina, Alberto, 2000. "Who Gives Foreign Aid to Whom and Why?," Scholarly Articles 4553020, Harvard University Department of Economics.
- Kenneth Y. Chay & Patrick J. McEwan & Miguel Urquiola, 2003.
"The Central Role of Noise in Evaluating Interventions that Use Test Scores to Rank Schools,"
NBER Working Papers
10118, National Bureau of Economic Research, Inc.
- Kenneth Y. Chay & Patrick J. McEwan & Miguel Urquiola, 2005. "The Central Role of Noise in Evaluating Interventions That Use Test Scores to Rank Schools," American Economic Review, American Economic Association, vol. 95(4), pages 1237-1258, September.
- Kenneth Chay & Patrick J. McEwan & Miguel Urquiola, 2003. "The Central Role of Noise in Evaluating Interventions that Use Test Scores to Rank Schools," Discussion Papers 0304-10, Columbia University, Department of Economics.
- Krishna Mazumdar, 2002. "A note on cross-country divergence in standard of living," Applied Economics Letters, Taylor & Francis Journals, vol. 9(2), pages 87-90.
- Guindon, G. Emmanuel & Boisclair, David, 2003. "Past, Current and Future Trends in Tobacco Use," University of California at San Francisco, Center for Tobacco Control Research and Education qt4q57d5vp, Center for Tobacco Control Research and Education, UC San Francisco.
- Desai, Meghnad, 1991. "Human development : Concepts and measurement," European Economic Review, Elsevier, vol. 35(2-3), pages 350-357, April.
- Quah, Danny T, 1996.
"Twin Peaks: Growth and Convergence in Models of Distribution Dynamics,"
Royal Economic Society, vol. 106(437), pages 1045-55, July.
- Quah, Danny, 1996. "Twin Peaks: Growth and Convergence in Models of Distribution Dynamics," CEPR Discussion Papers 1355, C.E.P.R. Discussion Papers.
- Arcelus Francisco J & Sharma Basu & Srinivasan Gopalan, 2005. "Foreign Capital Flows and the Efficiency of the HDI Dimensions," Global Economy Journal, De Gruyter, vol. 5(2), pages 1-14, June.
- Farhad Noorbakhsh, 1998. "The human development index: some technical issues and alternative indices," Journal of International Development, John Wiley & Sons, Ltd., vol. 10(5), pages 589-605.
- Stephen Morse, 2003. "Greening the United Nations' Human Development Index?," Sustainable Development, John Wiley & Sons, Ltd., vol. 11(4), pages 183-198.
- Sudhir Anand & Amartya Sen, 2000. "The Income Component of the Human Development Index," Journal of Human Development and Capabilities, Taylor & Francis Journals, vol. 1(1), pages 83-106.
- Danny Quah, 1996. "Twin Peaks: Growth and Convergence in Models of Distribution Dynamics," CEP Discussion Papers dp0280, Centre for Economic Performance, LSE.
- J. Ram Pillarisetti, 1997. "An empirical note on inequality in the world development indicators," Applied Economics Letters, Taylor & Francis Journals, vol. 4(3), pages 145-147.
- Tomson Ogwang, 2000. "Inter-country inequality in human development indicators," Applied Economics Letters, Taylor & Francis Journals, vol. 7(7), pages 443-446.
- Srinivasan, T N, 1994. "Human Development: A New Paradigm or Reinvention of the Wheel?," American Economic Review, American Economic Association, vol. 84(2), pages 238-43, May.
- Kobi Abayomi & Gonzalo Pizarro, 2013. "Monitoring Human Development Goals: A Straightforward (Bayesian) Methodology for Cross-National Indices," Social Indicators Research, Springer, vol. 110(2), pages 489-515, January.
- Andrea Brandolini & Giovanni Vecchi, 2011. "The Well-Being of Italians: A Comparative Historical Approach," Quaderni di storia economica (Economic History Working Papers) 19, Bank of Italy, Economic Research and International Relations Area.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Fallak).
If references are entirely missing, you can add them using this form.