A multivariate technique called principal component analysis is used to combine measures of human development. The first principal component index is the linear combination of component indexes with maximal information content. This multivariate technique accounts for differences in the variances of component indexes as well as interdependence among the component indexes. The first principal component of the three indexes used in the HDI (life expectancy, education, GDP) yields rankings nearly identical to the HDI itself. We interpret this as theoretical support for the HDI ranking system as a metric of international human development.
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Paper provided by Utah State University, Department of Economics in its series Working Papers with number
2002-11.
Find related papers by JEL classification: E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles R10 - Urban, Rural, and Regional Economics - - General Regional Economics - - - General
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