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Measuring Human Development: A Stochastic Dominance Approach

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  • Mehmet Pinar

    ()
    (University of Guelph, Canada)

  • Thanasis Stengos

    ()
    (University of Guelph, Canada)

  • Nikolas Topaloglou

    ()
    (Athens University of Economics and Business, Greece)

Abstract

We consider a weighting scheme that yields the best-case scenario measurement of the Human Development Index (HDI) using an approach that relies on consistent tests for stochastic dominance efficiency (SDE). We compare a given hybrid composite index such as the official equally-weighted HDI to all possible indices constructed from a set of individual components to obtain the most optimistic scenario for development. In the best-case scenario index education is weighted considerably more than the other two components, per capita income and life expectancy, relative to the weight that it gets in the official equally-weighted index. We find that the best-case scenario hybrid index leads to a marked improvement of measured development over time when compared with the official equally-weighted HDI.

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Bibliographic Info

Paper provided by The Rimini Centre for Economic Analysis in its series Working Paper Series with number 42_12.

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Date of creation: Jun 2012
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Handle: RePEc:rim:rimwps:42_12

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Keywords: Nonparametric Stochastic Dominance; Human Development Index; Mixed Integer Programming;

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References

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Cited by:
  1. Elettra Agliardi & Mehmet Pinar & Thanasis Stengos, 2013. "A Sovereign Risk Index for the Eurozone Based on Stochastic Dominance," Working Paper Series 58_13, The Rimini Centre for Economic Analysis.
  2. Athanassoglou, Stergios, 2013. "Multidimensional welfare rankings," MPRA Paper 51642, University Library of Munich, Germany.
  3. Elettra Agliardi & Mehmet Pinar & Thanasis Stengos, 2013. "A New Index of Environmental Quality Based on Greenhouse Gas Emissions," Working Paper Series 12_13, The Rimini Centre for Economic Analysis.
  4. Stergios Athanassoglou, 2013. "Robust Multidimensional Welfare Comparisons: One Vector of Weights, One Vote," Working Papers 2013.40, Fondazione Eni Enrico Mattei.

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